What to Include in a Letter of Intent

Check mark blueWhen you are negotiating a sale transaction, the Letter of Intent (LOI) is a crucial step. There are a wide variety of items that the seller should consider including in the LOI. Below are a few examples:

  • If the sale includes assets, provide a list of the assets being sold as well as any assets to be specifically excluded
  • Outline the liabilities to be assumed by the buyer and detail any to be specifically excluded
  • Clearly state the purchase price, payment terms and any other relevant financing details
  • Set forth a general outline for how the due diligence process will proceed
  • Consider stating whether the selling entity will alone give the representations and warranties, or if the individual owners will provide them as well
  • List any closing conditions
  • State the basic indemnification terms
  • If any employment or consulting agreements are part of the transaction, list the basic terms
  • Detail any non-competition requirements that will govern the sellers after the deal is closed
  • Describe the buyer’s intent with regard to the seller’s employees and whether they will be retained
  • Note the projected closing date and if there is a deadline for the closing to occur
  • Clarify confidentiality and non-disclosure requirements to ensure non-public information is protected
  • Disclaim any reliance by the buyer on information it reviews during the due diligence process to prevent liability if the transaction does not successfully close
  • Clarify which party is responsible to pay deal expenses if the transaction does not close
  • Include standard contract language regarding governing law, jurisdiction for disputes and similar boilerplate provisions
  • Clarify which terms of the LOI are binding and which are not

In short, you want to be as concise as possible and work to ensure that the seller and buyer on the same page to avoid disputes.

The attorneys at The Swenson Law Firm provide a variety of employment law services to businesses of all sizes. Contact us today to schedule your initial consultation.

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