Letter of Intent for Merger Template

Letter of Intent for Merger Template

[Company A Letterhead or Company A Name and Address]

[Date]

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

Re: Letter of Intent Regarding Proposed Merger of [Company A] and [Company B]

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

This non-binding Letter of Intent (“LOI”) sets forth certain preliminary terms and conditions under which [Company A Legal Name], a [Jurisdiction] [entity type] (“Company A”), and [Company B Legal Name], a [Jurisdiction] [entity type] (“Company B” and, together with Company A, the “Parties”), propose to pursue a possible business combination (the “Transaction”). Except as expressly stated in Section 13 (Binding and Non-Binding Provisions), this LOI is intended as a framework for further discussion and negotiation rather than a binding agreement to consummate the Transaction.

1. Parties and Business Overview

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

1.2 Company B.
Legal Name: [Company B Legal Name]
Entity Type: [Corporation / LLC / Other]
Jurisdiction of Organization: [Jurisdiction]
Principal Address: [Company B Address]

1.3 Business Overview.
Company A is engaged in the business of [brief description].
Company B is engaged in the business of [brief description].

2. Proposed Merger Structure

2.1 Structure.
The Parties currently contemplate that the Transaction will be structured as a statutory merger under the laws of [State/Province, Country], pursuant to which:

• [Surviving Entity Name] (“Surviving Company”) will be the surviving entity; and

• [Other company name] will merge with and into the Surviving Company, with its separate legal existence ceasing at the effective time of the merger.

2.2 Alternative Structures.
The Parties acknowledge that, based on tax, legal, accounting, or regulatory considerations, the final structure may be modified to another form of business combination (such as a share exchange, holding company structure, or asset transfer), as mutually agreed in the definitive merger agreement (the “Merger Agreement”).

2.3 Assumption of Assets and Liabilities.
At closing, the Surviving Company is expected to succeed to substantially all of the assets, rights, and obligations of the constituent companies, subject to the terms set forth in the Merger Agreement and applicable law.

3. Consideration, Valuation, and Exchange Ratio

3.1 Indicative Valuation.
For purposes of this LOI, the Parties acknowledge the following indicative equity valuations (subject to due diligence and final negotiation):

• Indicative equity value of Company A: [Currency and Amount or valuation range];

• Indicative equity value of Company B: [Currency and Amount or valuation range].

3.2 Exchange Ratio / Consideration.
The consideration to be issued to the current security holders of [Company B or Company A] is expected to consist of:

• [Number or formula] of shares or units of the Surviving Company for each [share / unit] of [Company B or Company A]; and/or

• Cash consideration in the amount of [Currency and Amount] allocated as follows: [brief description].

The final exchange ratio and consideration mix will be determined in the Merger Agreement, taking into account due diligence and any agreed adjustments.

3.3 Treatment of Options and Other Securities.
The Parties anticipate that outstanding stock options, warrants, restricted stock units, or other equity-linked awards of each company will be treated as follows:

• [Converted into or replaced by comparable awards of the Surviving Company]; or

• [Cashed out based on the consideration per share]; or

• [Other agreed treatment].

Detailed terms will be set forth in the Merger Agreement and, if applicable, in separate equity plan documents.

4. Governance of the Combined Company

4.1 Board of Directors.
Upon closing, the board of directors (or equivalent governing body) of the Surviving Company is expected to consist of [number] members, initially comprised of:

• [Number] directors designated by Company A; and

• [Number] directors designated by Company B.

The initial Chair of the Board will be [Name or “to be designated by mutual agreement”].

4.2 Management Team.
The Parties anticipate that the senior management team of the Surviving Company will include:

• Chief Executive Officer: [Name or Company A/B designee];

• Chief Financial Officer: [Name or Company A/B designee];

• Other key positions and reporting lines to be agreed during negotiation of the Merger Agreement.

4.3 Company Name and Headquarters.
The Surviving Company is expected to operate under the name [New or Existing Name] with its principal executive offices located at [City, State/Province, Country], subject to mutual agreement.

5. Due Diligence

5.1 Scope of Due Diligence.
Following execution of this LOI, each Party and its advisors will conduct financial, legal, tax, operational, commercial, and technical due diligence of the other Party, including review of:

• Financial statements and internal reports;

• Material contracts, licenses, and customer/supplier agreements;

• Corporate governance documents and capitalization;

• Intellectual property, technology, and data protection practices;

• Employment, benefits, and labor matters;

• Litigation, compliance, and regulatory matters.

5.2 Access and Cooperation.
Each Party agrees to provide reasonable access to facilities, books and records, and key personnel (as mutually agreed), during normal business hours upon reasonable notice, subject to confidentiality obligations and applicable law.

6. Key Terms of Definitive Merger Agreement

The Merger Agreement and related documents will contain customary terms for a transaction of this type, including:

6.1 Representations and Warranties.
Mutual and one-sided representations and warranties regarding:

• Organization, qualification, and authority;

• Capitalization and ownership of securities;

• Financial statements and absence of undisclosed liabilities;

• Compliance with laws and permits;

• Material contracts and relationships;

• Intellectual property and IT systems;

• Privacy, data security, and cybersecurity;

• Employees, benefits, and labor matters;

• Taxes, environmental matters, and litigation;

• Absence of material adverse changes.

6.2 Pre-Closing Covenants.
Obligations of each Party to:

• Operate its business in the ordinary course between signing and closing;

• Maintain key relationships with employees, customers, and suppliers;

• Not take certain actions (for example, issuing securities, incurring major indebtedness, or making extraordinary distributions) without the other Party’s consent;

• Provide periodic financial and operational updates.

6.3 Conditions to Closing.
Customary conditions that must be satisfied or waived before closing, including:

• Completion of due diligence to each Party’s satisfaction;

• Approval of the Merger Agreement and Transaction by the boards of directors (or equivalent) of each Party;

• Approval of the Transaction by the shareholders or members of each Party, where required;

• Receipt of required regulatory or governmental approvals, including any antitrust, competition, or industry-specific approvals;

• Absence of any law, injunction, or order prohibiting or materially restricting the Transaction;

• Absence of a specified material adverse effect on either Party, as defined in the Merger Agreement.

7. Employee and Benefit Matters (Indicative)

7.1 Employees.
The Merger Agreement is expected to address the treatment of employees, which may include:

• Offers of continued employment to certain employees of each Party;

• Recognition of prior service for benefit plan purposes, where applicable;

• Possible retention or incentive arrangements for key employees.

7.2 Benefit Plans.
The Parties will discuss treatment of existing benefit, retirement, and incentive plans, and whether such plans will be assumed, merged, replaced, or terminated, consistent with applicable law and the Merger Agreement.

8. Integration Planning

The Parties anticipate cooperating in good faith on integration planning after signing the Merger Agreement and prior to closing, consistent with applicable antitrust and competition laws. Integration planning topics may include:

• Organizational structure of the Surviving Company;

• Branding and marketing;

• Technology and systems integration;

• Customer and supplier communication plans;

• Internal communications with employees.

9. Timeline and Process

9.1 Indicative Timeline.
Subject to the conditions described in this LOI, the Parties currently anticipate the following non-binding timeline:

• Execution of LOI: on or about [Date];

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

• Delivery of initial draft Merger Agreement: by [Date];

• Execution of Merger Agreement: by [Date];

• Target Closing Date: on or about [Date], subject to regulatory and shareholder approvals.

9.2 Good-Faith Efforts.
While this LOI (other than the Binding Provisions) is non-binding, the Parties intend to work in good faith and with commercially reasonable efforts to negotiate and finalize the Merger Agreement and to pursue any necessary approvals.

10. Confidentiality

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

10.2 Confidentiality Obligation (If No Prior NDA).
[If no NDA exists:] The Parties agree that non-public information exchanged in connection with this LOI or the Transaction will be treated as confidential, used solely for evaluating the Transaction, and disclosed only to employees, advisors, and financing sources who have a need to know and are subject to comparable confidentiality obligations. The Parties agree to negotiate and execute a separate written NDA as soon as reasonably practicable.

11. Exclusivity / No-Shop (If Desired)

11.1 Exclusivity Period.
In consideration of the efforts and expenses to be undertaken by each Party in connection with the Transaction, the Parties agree that, for the period beginning on the date of countersignature of this LOI and ending on [End Date or Number of Days] (the “Exclusivity Period”), neither Party will, directly or indirectly:

• Solicit or initiate discussions with any third party regarding any proposal for a merger, acquisition, share exchange, business combination, or sale of a material portion of its equity or assets that would conflict with the Transaction;

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

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

11.2 Notice of Unsolicited Proposals.
If either Party receives any unsolicited inquiry, proposal, or expression of interest regarding a competing transaction during the Exclusivity Period, that Party shall promptly notify the other Party of such contact, subject to any legal restrictions on disclosure.

12. Expenses

Each Party shall bear its own costs and expenses (including fees of legal, tax, accounting, and financial advisors) incurred in connection with this LOI and the Transaction, whether or not the Transaction is consummated, unless otherwise agreed in the Merger Agreement.

13. Binding and Non-Binding Provisions

13.1 Non-Binding Business Terms.
The Parties acknowledge and agree that, except as expressly stated in Section 13.2, this LOI is intended only as an expression of mutual intent and does not constitute a binding agreement to proceed with or complete the Transaction, or to enter into the Merger Agreement. Either Party may terminate discussions at any time, subject to the Binding Provisions.

13.2 Binding Provisions.
The following sections are intended to be legally binding upon the Parties when this LOI is signed and delivered by both Parties:

• Section 10 (Confidentiality), to the extent no separate NDA governs or in addition to any existing NDA;

• Section 11 (Exclusivity / No-Shop), if included;

• Section 12 (Expenses);

• Section 14 (Governing Law and Dispute Resolution);

• This Section 13.2 (Binding Provisions); and

• Any additional clauses the Parties expressly designate as binding here: [List any additional binding clauses, if applicable].

All other provisions of this LOI are non-binding and are intended solely as a basis for further discussions and negotiation.

14. Governing Law and Dispute Resolution

14.1 Governing Law.
This LOI (including the Binding Provisions) shall be governed by and construed in accordance with the laws of [State/Province, Country], without regard to its conflict-of-law rules.

14.2 Dispute Resolution.
Any disputes arising out of or relating to the Binding Provisions of this LOI shall be resolved by [courts of specified jurisdiction / arbitration before specified forum] located in [City, State/Province, Country], unless otherwise agreed by the Parties in the Merger Agreement.

15. Expiration of LOI

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

16. Counterparts and Delivery

This LOI may be executed in counterparts, including by electronic or facsimile signature, each of which shall be deemed an original and all of which together shall constitute one instrument. Electronic delivery of a signed counterpart shall be as effective as delivery of a manually signed original.

17. Signatures

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

[Company A Legal Name]

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

[Company B Legal Name]

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