Letter of Intent for Acquisition Template

Letter of Intent for Acquisition Template

[Buyer Letterhead or Buyer Name and Address]

[Date]

[Seller Name]
[Seller Address Line 1]
[Seller Address Line 2]
[City, State/Province, ZIP/Postal Code, Country]

Re: Letter of Intent Regarding Proposed Acquisition of [Target Company / Business / Assets]

Dear [Seller Contact Name or “Sir/Madam”],

This non-binding Letter of Intent (“LOI”) sets forth certain preliminary terms and conditions under which [Buyer Legal Name], a [Jurisdiction] [entity type] (“Buyer”), proposes to acquire from [Seller Legal Name], a [Jurisdiction] [entity type] (“Seller”), all or certain interests in [Target Name or Business Description] (the “Transaction”). Except as expressly stated in Section 11 (Binding and Non-Binding Provisions), this LOI is intended as an expression of interest and a framework for further discussions rather than a binding agreement to complete the Transaction.

1. Parties and Target

1.1 Buyer.
Buyer: [Buyer Legal Name]
Entity Type: [Corporation / LLC / Other]
Jurisdiction of Organization: [Jurisdiction]
Address: [Buyer Address]

1.2 Seller / Target.
Seller: [Seller Legal Name]
Entity Type: [Corporation / LLC / Sole Proprietorship / Other]
Jurisdiction of Organization (if applicable): [Jurisdiction]
Principal Place of Business: [Address]

1.3 Business / Assets to Be Acquired.
The Transaction is expected to involve the acquisition of:

• [All outstanding [shares / membership interests] of [Target Company Name]]; and/or

• [Specified assets of the business, such as inventory, equipment, contracts, intellectual property, and goodwill] (collectively, the “Assets”).

2. Proposed Transaction Structure

2.1 Structure.
The parties currently contemplate that the Transaction will be structured as a:

• [Stock / Share Purchase]; or

• [Asset Purchase]; or

• [Merger / Other Structure].

The final structure may be adjusted for tax, legal, or commercial reasons as mutually agreed in the definitive agreements.

2.2 Assumed Liabilities (If Any).
Subject to due diligence and negotiation of definitive agreements, Buyer may assume the following liabilities (if applicable):

• [Assumed contracts and related obligations];

• [Certain trade payables identified on a closing balance sheet];

• [Specific obligations described here].

All other liabilities shall remain with Seller unless expressly assumed in the definitive agreements.

3. Purchase Price and Consideration

3.1 Purchase Price.
The total consideration for the Transaction is currently expected to be:

Purchase Price: [Currency and Amount]

3.2 Form of Consideration.
The Purchase Price is proposed to be paid as follows:

• Cash at Closing: [Currency and Amount];

• Equity Consideration (if any): [Number and type of Buyer securities and brief terms];

• Promissory Note (if any): [Principal amount, interest, maturity];

• Other Consideration: [Description].

3.3 Purchase Price Adjustments (If Applicable).
The Purchase Price may be subject to customary adjustments, including, for example:

• Working capital adjustment measured against a target working capital amount of [Currency and Amount];

• Adjustments for indebtedness, cash, and transaction expenses;

• Adjustments based on inventory counts or other identified items.

Details of any adjustments will be set forth in the definitive agreements.

3.4 Earn-Out (If Applicable).
If the parties agree to an earn-out:

• Earn-Out Amount: [Currency and Amount or range];

• Earn-Out Period: [Number of months/years after closing];

• Performance Metrics: [Revenue / EBITDA / other metric].

4. Due Diligence

4.1 Scope.
Following the execution of this LOI, Buyer and its advisors will conduct financial, legal, tax, operational, commercial, and technical due diligence of the Target and the Assets.

4.2 Seller Cooperation.
Seller will provide Buyer with reasonable access, during normal business hours and upon reasonable notice, to:

• Relevant financial statements and records;

• Material contracts and licenses;

• Employee and benefits information (subject to privacy laws);

• Intellectual property, IT systems, and other key information;

• Premises and key personnel as mutually agreed.

5. Key Terms of Definitive Agreements

The definitive agreements (the “Definitive Agreements”) are expected to include customary terms appropriate for a transaction of this type, including:

5.1 Representations and Warranties.
Standard representations and warranties by Seller and Buyer regarding:

• Organization, authority, and ownership;

• Financial statements and absence of undisclosed liabilities;

• Compliance with laws and permits;

• Contracts, customers, and suppliers;

• Intellectual property and data protection;

• Employees, benefits, and labor matters;

• Taxes and litigation;

• Title to shares or Assets, as applicable.

5.2 Covenants Before Closing.
Obligations on Seller (and Buyer, where applicable) to:

• Operate the business in the ordinary course;

• Maintain key relationships;

• Not incur certain extraordinary obligations without Buyer’s consent;

• Provide periodic updates on operations and financial performance.

5.3 Conditions to Closing.
Conditions that must be satisfied or waived before closing, including:

• Completion of due diligence to Buyer’s satisfaction;

• Negotiation and execution of Definitive Agreements;

• Receipt of required consents, approvals, and permits;

• Absence of material adverse changes;

• Completion of financing arrangements (if any).

6. Closing and Timeline

6.1 Target Closing Date.
Subject to satisfaction of the conditions described above, the parties currently anticipate a closing date on or about:

Target Closing Date: [Target Closing Date]

6.2 Timeline Milestones.
Indicative milestones may include:

• Execution of this LOI: [Target Date];

• Completion of primary due diligence: [Target Date];

• Delivery of first draft of Definitive Agreements: [Target Date];

• Signing of Definitive Agreements: [Target Date].

7. Confidentiality

7.1 Existing NDA.
[If an NDA is already in place:] The parties acknowledge that they are already bound by that certain [Non-Disclosure Agreement / Confidentiality Agreement] dated [Date of NDA] (the “NDA”), which shall continue in full force and effect and shall also govern all information exchanged in connection with this LOI and the Transaction.

7.2 Confidentiality Obligation (If No Prior NDA).
[If no NDA is in place:] The parties agree that any non-public information exchanged in connection with this LOI or the Transaction will be kept confidential, used only for evaluating the Transaction, and disclosed only to those employees, advisors, and financing sources who have a need to know and are under similar confidentiality obligations. The parties agree to negotiate and sign a separate written NDA as soon as practicable.

8. Exclusivity / No-Shop (If Desired)

8.1 Exclusivity Period.
In consideration of Buyer’s time and expense in pursuing this Transaction, Seller agrees that for a period beginning on the date of Seller’s countersignature of this LOI and ending on [End Date or Number of Days] (the “Exclusivity Period”), Seller will not, directly or indirectly:

• Solicit or initiate discussions with any third party regarding any proposal for the sale of the Target, the Assets, or any similar transaction;

• Provide non-public information to any third party for such purposes; or

• Enter into any letter of intent, term sheet, or agreement for a competing transaction.

8.2 Notice of Unsolicited Contacts.
If Seller receives any unsolicited inquiry or proposal during the Exclusivity Period, Seller shall promptly notify Buyer of such contact (without disclosing confidential terms that Seller is legally prohibited from sharing).

9. Expenses

Each party shall be responsible for its own costs and expenses (including fees of legal, accounting, and financial advisors) incurred in connection with this LOI and the Transaction, whether or not the Transaction is completed, unless otherwise agreed in the Definitive Agreements.

10. Governing Law and Dispute Matters

10.1 Governing Law.
This LOI (including the binding provisions described in Section 11) shall be governed by and construed in accordance with the laws of [State/Province, Country], without regard to its conflict-of-law rules.

10.2 Dispute Resolution.
Any disputes arising out of the binding provisions of this LOI shall be resolved by [court jurisdiction / arbitration forum] located in [City, State/Province, Country], unless the parties later agree otherwise in the Definitive Agreements.

11. Binding and Non-Binding Provisions

11.1 Non-Binding Business Terms.
The parties acknowledge and agree that, except as expressly stated in Section 11.2, this LOI is an expression of interest only and does not constitute a binding agreement to proceed with or complete the Transaction. No party shall be obligated to proceed with the Transaction unless and until the Definitive Agreements have been executed and delivered by Buyer and Seller.

11.2 Binding Provisions.
The following provisions of this LOI are intended to be legally binding upon the parties when signed and delivered:

• Section 7 (Confidentiality), to the extent no separate NDA governs or in addition to any existing NDA;

• Section 8 (Exclusivity / No-Shop), if included;

• Section 9 (Expenses);

• Section 10 (Governing Law and Dispute Matters);

• This Section 11.2 (Binding Provisions); and

• Any other clauses that the parties expressly mark as “binding” here: [Additional Binding Clauses, if any].

All other provisions are non-binding and are intended only as a basis for further discussion and negotiation.

12. No Reliance and No Third-Party Beneficiaries

12.1 No Reliance on Non-Binding Terms.
Except for the Binding Provisions, neither party may rely on this LOI as creating any obligation to consummate the Transaction or to continue negotiations in good faith for any specific period. Either party may discontinue negotiations at any time, subject to the Binding Provisions.

12.2 No Third-Party Beneficiaries.
This LOI is for the benefit of the parties only and is not intended to confer any rights or remedies on any third party.

13. Expiration of LOI

If this LOI is not signed by both parties on or before [Expiration Date], this LOI shall be of no further force or effect, unless the parties agree in writing to extend this deadline.

14. Signatures

If the foregoing terms are acceptable to you, please sign below to indicate your agreement to the Binding Provisions and your agreement in principle to the non-binding business terms described above.

Buyer

[Buyer Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]

Seller

[Seller Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]