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Letter of Intent – Acquisitions

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In case you’re thinking about buying a business — start with a letter of intent.

 

Most business transactions start with a conversation.  The parties discuss the deal, the terms, and perhaps the price.

Then, they write it down.

Whether the buyer or the seller, a letter of intent plays a fundamental role in structuring a transaction by formalizing the agreed upon deal points and identifying opening issues.

Often called “an agreement to agree” a letter of intent is a summary of the major transaction points.

Is it a binding document – rarely?

Often very specific provisions, like confidentiality, may be binding, but most of the terms in the document are subject to the final transaction documents, often called the definitive agreement.

 

If you are thinking about transaction – consider these questions for your letter of intent:

  1. What are the most critical business deal points (such as the sales price and the payment terms)?
  1. What are the provisions that the parties want to be binding (such as exclusivity, costs, and confidentiality)?
  1. How does the letter of intent terminate and what are the consequences, if any?

 

Selling your business – or buying someone else’s business can be an exciting event.  Well planned and documented, the parties ultimately complete a transaction both parties desire.  Here is a list of initial items to consider when identifying your deal terms:

 


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Contact Us.  If you would like to discuss the information in this checklist, please contact us at (540)443-9272 or jeff@mitchell-firm.com [1].

 


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