letter-of-intent-loi

name

letter-of-intent-loi

description

Drafts U.S. corporate transaction Letters of Intent (LOI) for mergers, acquisitions, investments, and strategic alliances. Separates non-binding intent from enforceable obligations and defines deal structure, key economics, and closing path. Use when converting deal terms into a preliminary transaction document. Trigger keywords: "LOI", "letter of intent", "M&A LOI", "merger term sheet", "no-shop", "exclusivity", "deal letter".

Letter of Intent (LOI)

Drafts a transaction LOI that advances execution while preserving negotiating flexibility. Default posture: non-binding except explicitly designated provisions.

Prerequisites

1. Party identities, entity forms, and governing jurisdictions.
2. Transaction type and structure (asset sale, stock sale, merger, investment, JV, option).
3. Agreed economics: price, payment schedule, earn-outs, escrows, caps.
4. Timeline: signing target, exclusivity window, diligence period, closing date.
5. Conditions precedent and responsibility allocation (regulatory, financing, consents).
6. Binding vs non-binding designation for each term set.
7. Known constraints: antitrust, sector regulations, board/lender approvals.

Output Structure / Process

Produce an audit-ready LOI in business-letter format using this sequence.

1) Intake Validation

• Party names and addresses complete.
• Transaction purpose stated in one unambiguous sentence.
• Economic terms fully defined and internally consistent.
• Timeline mapped to conditions precedent.
• Definitive documents identified (SPA, merger agreement, ancillaries).
• Binding clause set explicitly chosen by user.
• Governing law and jurisdictional basis confirmed.

2) Clause Matrix

Section	Required?	Binding?
Date / Parties / Purpose	Yes	Non-binding
Transaction Overview	Yes	Non-binding
Principal Terms (price, structure, adjustments)	Yes	Non-binding unless stated
Conditions Precedent	Yes	Non-binding
Definitive Agreement Process	Yes	Mixed
Exclusivity / No-Shop	Optional	Usually binding
Confidentiality	Optional/Yes	Usually binding
Expenses / Costs	Optional	Usually binding
Liability Limitation / No-Action	Optional	Usually binding
Governing Law / Disputes	Yes	Binding
Signatures / Counterparts	Yes	Binding

3) Drafting Rules

• Always include a plain-language binding-effect section with an enumerated list of binding carve-outs.
• Include no-liability clause for failure to close and good-faith negotiation language for definitive agreements.
• Keep conditions precedent objective, verifiable, and assigned to a responsible party.
• Do not embed tax opinions; use a placeholder for tax allocations.
• Definitive agreement controls if conflict with LOI.

4) Template Skeleton

[Date]
[Party A Name]
[Party B Name]

RE: Letter of Intent – Proposed [Transaction Type]

[Opening: parties + transaction purpose]

1. Transaction Overview
2. Transaction Structure
3. Principal Terms
4. Conditions Precedent
5. Binding Commitments (Confidentiality / Exclusivity / Costs / Governing Law)
6. Definitive Agreements and Timeline
7. Termination and Liability
8. Miscellaneous (integration, notices, counsel, no assignment)
9. Signature Blocks

5) Quality Gate

• Defined terms consistent throughout (Transaction, Closing Date, Effective Date, CPs).
• All amounts specify currency, basis, and payment schedule.
• Non-compete references included only if jurisdictionally supportable and requested.
• Public-company-sensitive language flagged with compliance review placeholder.

Guidelines

• Use clean drafting style; avoid overcommitment language in non-binding portions.
• Do not omit remedies for breach of expressly binding clauses.
• If existing NDA is signed, state LOI is supplemental and preserve NDA hierarchy.
• For regulated sectors, add counsel review notes on approvals and filing requirements.
• For cross-border transactions, flag foreign-law and conflict-of-laws risk.
• If anti-circumvention concern exists, add carve-outs and enforcement language for exclusivity.