A letter of intent (LOI) is a document that outlines the preliminary agreement between two or more parties regarding a potential business transaction or partnership. It is a non-binding document that serves as a starting point for negotiations and sets out the key terms and conditions that the parties intend to include in a final agreement.
While the specific documents accompanying an LOI can vary depending on the nature of the transaction, some common documents that may be included are:
1. Confidentiality Agreement: Also known as a non-disclosure agreement (NDA), this document ensures that the parties involved will keep any confidential information shared during negotiations confidential.
2. Due Diligence Checklist: This document outlines the information and documents that one party may request from the other to conduct a thorough due diligence process before finalizing the agreement.
3. Financial Statements: Parties may exchange financial statements to assess the financial health and stability of the other party involved in the transaction.
4. Memorandum of Understanding (MOU): Similar to an LOI, an MOU is a preliminary agreement that outlines the terms and conditions of a proposed transaction. It may be used interchangeably with an LOI in some cases.
5. Term Sheet: A term sheet is a summary document that outlines the key terms and conditions of a proposed transaction. It provides a framework for negotiations and serves as a basis for drafting the final agreement.
It’s important to note that the specific documents accompanying an LOI can vary depending on the transaction and the preferences of the parties involved. It is advisable to consult with legal professionals to ensure that all necessary documents are included and that they accurately reflect the intentions of the parties.
