A letter of intent is a document in which a prospective buyer or investor sets out the key terms on which it proposes to proceed — price, structure, conditions, exclusivity and timetable. It is usually non-binding on the main commercial terms, although provisions such as confidentiality and exclusivity are typically binding.
Signing an LOI marks the shift from competitive bidding to detailed diligence and documentation, and often grants the buyer exclusivity.
Issued after initial offers in M&A and investment processes, before due diligence begins in earnest.
A letter of intent is a document in which a prospective buyer or investor sets out the key terms on which it proposes to proceed — price, structure, conditions, exclusivity and timetable. It is usually non-binding on the main commercial terms, although provisions such as confidentiality and exclusivity are typically binding.
Issued after initial offers in M&A and investment processes, before due diligence begins in earnest.
Both set out the key proposed terms of a deal before full documentation, and both are largely non-binding. An LOI is typically issued by a buyer or investor in an M&A process and often grants exclusivity; a term sheet is the broader instrument used across debt, equity and M&A to frame negotiations.
Usually not on the main commercial terms — price, structure and timetable remain proposals. However, provisions such as confidentiality and exclusivity are typically drafted to bind the parties, so a seller granting exclusivity is genuinely restricted from engaging other bidders even though the deal itself is unsigned.
Speak to a partner about how this applies to your transaction.
