What should be included in a Letter of Intent?

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A Letter of Intent (LOI) is a crucial document in the transaction process, signaling a serious intent to proceed with the purchase and serving as a preliminary agreement between the buyer and the seller that outlines the key terms of the purchase before a definitive agreement is signed.

LOIs should be very detailed, including the proposed purchase price and payment structure (e.g., cash, stock, or a combination), the structure of the deal (asset sale vs. stock sale), and any contingencies that must be met before the deal can close, such as financing arrangements and due diligence results. The LOI should also specify any exclusivity period during which the seller cannot engage with other potential buyers.

Crafting a clear and detailed LOI is a critical step in ensuring both parties are aligned on the deal's terms and conditions, setting the stage for a successful transaction.

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