LETTER OF INTENT TO PURCHASE A BUSINESS 2026

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  1. Click ‘Get Form’ to open the LETTER OF INTENT TO PURCHASE A BUSINESS in the editor.
  2. Begin by filling in the date at the top of the document. This is crucial for establishing a timeline for negotiations.
  3. In the 'Buyer' and 'Seller' sections, enter the full names and addresses of both parties involved in the transaction.
  4. Detail the transaction specifics under 'Re: Purchase of ABC, Inc.' Clearly outline what assets and liabilities are being considered for purchase.
  5. Complete each section regarding negotiation terms, including 'Agreement to Negotiate in Good Faith' and any conditions that must be met before finalizing the agreement.
  6. Ensure you specify any covenants or responsibilities that each party agrees to uphold during negotiations.
  7. Finally, have both parties sign and date at the bottom of the document to indicate acceptance of terms outlined within.

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The Bottom Line The purpose of an LOI is to clarify which key points of a deal must be negotiated, protect all parties involved in the deal, and announce the nature of the deal, such as a joint venture or a merger between two companies.
What should a Letter of Intent to Buy a Business Include? Business Details. When drafting a LOI to purchase a business, it is crucial to outline the specifics of the company under consideration. Purchase Terms. Express Intent and Timeline. LOI Pros Cons. Due Diligence. Negotiations. Final Purchase Agreement. Closing the Deal.
In the instance of a letter of intent to purchase a business, the LOI, alternatively known as a letter of interest or a term sheet, is used to establish an understanding between the buyer and the seller. It is a preliminary step in the process of conducting a business sale and the first of many legal documents.
This lack of detail in a letter of intent creates scope for ambiguity as to both the terms and status of such letters. Such uncertainty can lead to costly disputes such as the recent case reported as CLS Civil Engineering Ltd v WJG Evans and Sons Ltd [2024].
A letter of intent is a letter from you to the seller of the business that lets them know that you are seriously considering submitting a formal bid to purchase the business, and that lays out the proposed transaction details at a high level.

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Your letter may contain the following elements: Name and contact information of the buyer. Name and contact information of the seller. Detailed description of the items or property being sold. Any relevant disclaimers or liabilities. The total purchase price. Method of payment and other payment terms, including dates.
Given the uncertainty of how a deal will progress, in most cases neither the buyer nor the seller wants to be ultimately bound by the LOI and will state in the LOI that it is non-binding. In that circumstance, either party should be able to walk away from the deal without legal liability.

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