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Letter of Intent (LOI) template
Letter of Intent (LOI) sample


What is Letter of Intent (LOI)?

Letter of Intent (LOI) A Letter of Intent (LOI) expresses the intent to engage in a business transaction, specifying key terms and conditions as a preliminary step toward formalizing a contract or agreement.



Sample template:



LETTER OF INTENT

FOR THE ACQUISITION OF MAJORITY STAKE IN TECH STARTUP

Between SilverStar Enterprises, a corporation duly organized and existing under the laws of the United States of America, having its registered office at [Address] (“Buyer”)


And NewHorizon Ventures, a corporation duly organized and existing under the laws of the United States of America, having its registered office at [Address] (“Seller”)


(Collectively, the “Parties”)



1. ESTABLISHMENT OF TRANSACTION PURPOSE

1.1. Purpose of Letter of Intent


This Letter of Intent (“LOI”) is entered into by and between the Parties and sets forth their desire and intent for the Buyer to acquire a controlling share or majority interest in a technology start-up company, as currently owned by Seller (“Target Company” or “Company”). The Parties express their mutual intent to negotiate in good faith and complete, in a timely manner, the acquisition transaction contemplated in this LOI, subject to the terms and conditions herein and pursuant to a Formal Agreement (as defined below).



2. TERMS OF THE TRANSACTION

2.1. Investment Amount


The Buyer intends to acquire a majority stake in the Target Company for a purchase consideration to be negotiated between the Parties, based on the fair market value of the Target Company and other relevant factors, including (without limitation) the financial performance, intellectual property, customer base, business synergies, and operational and market conditions of the Target Company (the “Investment Amount”).



2.2. Transaction Structure


The contemplated transaction will likely be structured as either an asset purchase, stock purchase, or a combination thereof, or other form of acquisition agreement, as the Parties may mutually agree upon during the negotiation of the Formal Agreement.



2.3. Conditions Precedent


The completion of the acquisition transaction shall be subject to certain conditions precedent, including, but not limited to, successful completion of satisfactory due diligence by the Parties, securing of necessary regulatory approvals, obtaining requisite consents from third parties, and execution of definitive agreements satisfactory to both Parties in their sole discretion.



3. DUE DILIGENCE AND NEGOTIATION

3.1. Due Diligence


After mutual execution of this LOI, the Buyer and its authorized representatives and consultants shall have the right to carry out a due diligence investigation of the Target Company, including examination of financial, business, legal, labor, and technology aspects. The Seller will provide full access to all relevant information, documents, and personnel required by the Buyer for such purpose.



3.2. Negotiation and Execution of Formal Agreement


Further to the due diligence investigation, the Parties shall negotiate in good faith and agree upon the terms and conditions of a definitive acquisition agreement and all related agreements necessary to effectuate the contemplated transaction (collectively, the “Formal Agreement”). It is the Parties' intent that the Formal Agreement will include the specific transaction structure, representations, warranties, covenants, indemnities, termination rights, and other terms customary for a transaction of this nature. The Parties shall endeavor to execute the Formal Agreement within sixty (60) days from the date of this LOI or within an extended period as mutually agreed in writing by the Parties.



4. EXCLUSIVITY

4.1. Exclusivity Period


For a period of sixty (60) days from the date of this LOI, or such other period as the Parties may mutually agree in writing (the “Exclusivity Period”), the Seller will not, directly or indirectly, solicit, negotiate, or entertain offers, proposals, or discussions from any other person or entity concerning any acquisition, merger, or similar transaction, dilution, or sale of equity interest in the Target Company.



5. COSTS AND EXPENSES

All costs and expenses incurred in connection with this LOI and the contemplated transaction, including, without limitation, fees and expenses of financial advisors, legal counsel, and accountants, shall be borne by each Party, respectively.



6. LIMITATION OF LIABILITY AND RELEASE

This LOI is intended as a non-binding expression of the Parties’ intentions and desired objectives for considering a transaction as contemplated herein. No party shall have any rights or obligations or be bound by any negotiations, commitments, or representations, whether written or oral, except for the obligations set forth in Sections 4 (Exclusivity) and 5 (Costs and Expenses) hereof or as otherwise expressly provided in a mutually executed Formal Agreement.



7. CONFIDENTIALITY

The Parties acknowledge that, in the course of their discussions and negotiations, they may exchange confidential and proprietary information. The Parties shall continue to treat such information as confidential and in accordance with the terms of any existing confidentiality or non-disclosure agreement(s) between them, or, in the absence of such an agreement, shall maintain the confidentiality of information obtained during the negotiation process unless otherwise agreed in writing by the Parties.



8. GOVERNING LAW AND DISPUTE RESOLUTION

This LOI and any disputes or claims arising out of or in connection with its subject matter or formation shall be governed by and construed in accordance with the laws of the United States of America and the State of [State], without regard to conflicts of law principles. Any dispute arising out of or in connection with this LOI, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration under the [Rules of Arbitration], which rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be one. The seat, or legal place, of arbitration shall be [City, State]. The language of the arbitration shall be English.



9. ENTIRE AGREEMENT AND AMENDMENTS

This LOI constitutes the full and complete understanding between the Parties with respect to the subject matter herein, and supersedes all prior understandings or agreements, whether written or oral, relating to the subject matter herein. This LOI may be amended or modified only in writing, signed by the Parties.



10. COUNTERPARTS AND EFFECTIVE DATE

This LOI may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This LOI shall become effective on the date it is executed by the Parties.



IN WITNESS WHEREOF
, the Parties hereto have executed this Letter of Intent as of the [Date].

[Buyer Signature]
[Buyer Name]
[Title]

[Seller Signature]
[Seller Name]
[Title]

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Sections of a Letter of Intent (LOI)


In this Letter of Intent (LOI), you will see the following sections:

  1. Establishment of Transaction Purpose
  2. Terms of the Transaction
  3. Due Diligence and Negotiation
  4. Exclusivity
  5. Costs and Expenses
  6. Limitation of Liability and Release
  7. Confidentiality
  8. Governing Law and Dispute Resolution
  9. Entire Agreement and Amendments
  10. Counterparts and Effective Date


Summary of the sections:

  1. Establishment of Transaction Purpose : This section explains that the purpose of the LOI is for the Buyer to acquire a majority stake in the Target Company owned by the Seller. Both parties agree to negotiate in good faith to complete the acquisition.

  2. Terms of the Transaction : This section outlines the key terms of the transaction, such as the Investment Amount, Transaction Structure, and Conditions Precedent. It explains that the purchase price will be based on various factors, and the transaction may be structured in different ways. The completion of the transaction is subject to certain conditions, such as due diligence and regulatory approvals.

  3. Due Diligence and Negotiation : This section describes the due diligence process, where the Buyer will investigate the Target Company's financial, business, legal, labor, and technology aspects. The Seller will provide access to relevant information. After due diligence, the parties will negotiate and execute a Formal Agreement.

  4. Exclusivity : This section states that the Seller will not entertain offers or discussions with other parties regarding the sale of the Target Company for a specified period (Exclusivity Period).

  5. Costs and Expenses : This section explains that each party will bear their own costs and expenses related to the LOI and the transaction.

  6. Limitation of Liability and Release : This section clarifies that the LOI is non-binding, except for the Exclusivity and Costs and Expenses sections. No party is bound by any negotiations, commitments, or representations unless they are in a mutually executed Formal Agreement.

  7. Confidentiality : This section highlights that the parties will treat exchanged information as confidential, in accordance with any existing confidentiality agreements or, in the absence of such agreements, maintain confidentiality during the negotiation process.

  8. Governing Law and Dispute Resolution : This section states that the LOI is governed by the laws of the United States and a specific state. Any disputes will be resolved through arbitration under specified rules, with the arbitration taking place in a specified city and state.

  9. Entire Agreement and Amendments : This section explains that the LOI represents the full understanding between the parties and supersedes any prior agreements. Amendments to the LOI must be in writing and signed by both parties.

  10. Counterparts and Effective Date : This section states that the LOI may be executed in multiple counterparts, all of which together form one document. The LOI becomes effective when signed by both parties.

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