A letter of intent, sometimes called an LOI, statement of intent or memorandum of understanding, is a mostly nonbinding document used to summarize intentions between parties when considering joining a business, acquiring a business, selling a business or leasing commercial real estate. The letter of intent establishes what an agreement between the parties may look like in general terms while establishing confidentiality and other protection so that both parties can openly share information in the “due diligence process.” In the due diligence process, parties to the LOI can openly share detailed financial information, business processes, employees, customers and all aspects of a business.
What Is In A Letter Of Intent?
If done correctly, the letter of intent is specifically nonbinding but will outline purchase price, payment terms, timing, obligations of the parties, anticipated noncompete agreements and other terms that will later be integrated into a binding purchase agreement. In addition to the nonbinding terms, there are usually binding terms as to confidentiality, exclusivity, governing law and nonsolicitation. The business law attorneys at TdD Attorneys at Law LLC can take you step by step through the process if you are considering a strategic move in your business or looking to lease commercial real estate. Contact us before you move forward at (314) 819-5713 or you can reach us via email.
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