Letter of Intent to Purchase Business Template

4.8 (23 reviews)
All states | 7 types
Updated Jan 18, 2025
~ 3 pages
PDF
2.8K downloads
A Business Purchase Letter of Intent is a document between a buyer and a seller expressing intent to acquire a business under specific conditions. It is used to set the groundwork for negotiations before signing a full purchase agreement.
Business Purchase Letter of Intent

 

 

 ,  ,  

 

 

 

 ,  ,  

 

 

Dear Mr.  ,

This Letter of Intent is aimed at expressing the interest in acquiring  % of the total ownership interest in   incorporated under the laws of the State of  ,  having its registered place of business at   (hereinafter referred to as the "Company" or the "Business").

 .

We believe that the potential acquisition of the Business represents an advantageous opportunity for both parties.

Terms and conditions of the purchase

We offer the following terms for the purchase of the Company:

  • Purchase price:  .
  • Payment terms:  .
  • Assets and liabilities:  .
  • Structure of the acquisition: Asset purchase.
  • Real estate:  , located at  .
  • Financing:  .
  • Other:  .

Due diligence

We propose a period of due diligence to review the financial statements, contracts, and other relevant documents of the Company to commence upon the acceptance of this Letter of Intent, and will start no later than  .

Confidentiality 

By signing and accepting this Letter of Intent, both parties agree to maintain the confidentiality of all terms, conditions, and other information related to the potential acquisition shared during the negotiation process. Such information may not be disclosed without obtaining written consent from the other party. This confidentiality clause will remain in effect after the termination of this Letter of Intent.

Additionally, in the event of acceptance of the offer within the period specified herein,   agrees not to engage in negotiations with other potential buyers during the negotiations and due diligence period.

Effect of the Letter

This Letter of Intent shall be considered:

Binding: The parties acknowledge that remedies at law will be insufficient for any breach of this Letter and consequently agree that this Letter of Intent shall be enforceable by specific performance. The remedy for specific performance shall be cumulative of all of the rights at law or in equity of the parties under this Letter.

Conditions precedent

This Letter of Intent is subject to the fulfillment of the following conditions:

 .

Transactional provisions

We expect this transaction will be closed on or before  . The post-closing transition period will be discussed in more detail during the negotiations.

Governing law

This Letter shall be governed by the laws of the State of  .

Looking forward to engaging in further discussions and negotiations to elaborate on the terms of the sale and purchase agreement.

Please sign below to acknowledge receipt and acceptance of this Letter and return a copy of the signed document no later than  .

This Letter of Intent will terminate if a formal agreement is not signed within   from the date of this Letter.

Sincerely,

________________________________

(Place for signature)

 

 

Accepted by:

________________________________

(Place for signature)

 

_________________________________

 

 

Written by Karyna Pukaniuk - Reviewed by Jonathan McGill

Template Description

Copy section link
Paper titled "Business Purchase Letter of Intent"; woman and man shaking hands; statistics & graphics

Taking the first step toward acquiring a business is a significant event that demands careful and thoughtful planning. A crucial part of this process is creating a business purchase letter of intent (LOI). This document signifies a serious commitment from the buyer to continue the purchasing process and also lays the foundation for future negotiations.

Business purchase LOI plays an important role in transferring intellectual property ownership and rights. A well-drilled purchase letter of intent protects every party's interests and ensures that the transaction progresses smoothly without any unexpected obstacles.

When to Use a Business Purchase Letter of Intent

Copy section link

A letter of intent to purchase a business, often simply referred to as a letter of intent, is typically necessary when there are serious intentions to acquire a company. This may happen when an entrepreneur seeks to expand their business empire, an investor is targeting a profitable venture, or a corporation is aiming for strategic growth. The letter of intent is a symbolic leap from casual conversation to earnest commitment, confirming that the prospective buyer is ready to undergo formal due diligence.

The letter of intent business purchase establishes preliminary agreements between the buyer and seller. It outlines the basics of the deal and enables both parties to move forward with more detailed negotiations and contract formulations in confidence, knowing that their efforts are unlikely to be in vain.

Parties

Copy section link

  • Prospective buyer — The party expressing an interest in purchasing the company or business. It is their responsibility to draft the purchase letter of intent to communicate their serious intent and proposed terms for the acquisition. In the letter of intent for business purchase, the prospective buyer outlines details like the agreed purchase price, payment terms, and other vital information. 

  • Current owner — This refers to the individual, partnership, or other legal entity currently owning the business to be purchased. In a letter of intent to buy a business scenario, the current owner receives the document, reviews the outlined terms, and decides how to proceed. The current owner plays a critical role in scrutinizing the terms presented in the letter and preparing for the forthcoming negotiations. The response to the letter of intent could go on to shape the eventual agreement that legally transfers ownership of the business.

Key Terms

Copy section link
  • Business description: Provide a detailed description of the business being purchased, including its name, type, and location.
  • Purchase price: Mention the agreed-upon purchase price for the business.
  • Payment terms: Detail how and when the payment will be made.
  • Confidentiality clause: Ensure that a clause is included highlighting the need for discretion about the potential sale during negotiations.

How to Write a Business Purchase Letter of Intent

Copy section link

A letter of intent buying a business should be carefully written as it lays the groundwork for formal buying agreements. Below are the key steps you should include in your letter:

  1. Identifying the parties:
    Clearly mention the names of both the buyer and the seller, along with their respective roles in the transaction.

  2. Describing the business:
    Provide a comprehensive description of the business being acquired. This should include relevant details such as the business's name, type, location, and current operation status. The use of a letter of intent to purchase a business template can be beneficial to ensure all salient points are covered. 

  3. Stating the purchase price:
    Clearly mention the proposed purchase price. This should be an amount mutually agreed upon by both parties.

  4. Defining payment terms:
    Outline the payment terms, including the deposit amount (if any), payment method, and payment schedule.

  5. Adding confidentiality clause:
    Include a confidentiality clause in your letter of intent purchase business. This serves to ensure both parties exercise discretion regarding the potential sale throughout the negotiation process.

  6. Discussing due diligence:
    Address plans and conditions for conducting due diligence. This process allows the buyer to assess the value and risks associated with the business before the final purchase.

  7. Indicating timeline:
    Indicate an expected timeline for negotiations and the final purchase. Having a clear timeline can help maintain momentum and focus.

  8. Closing the letter:
    Always end the business purchase offer letter by restating your intent to purchase the business subject to the terms set forth and request the seller’s timely response.

Creating an intent to purchase a business agreement is a pivotal step in business acquisition. A well-crafted letter plays a crucial role in establishing the groundwork for subsequent negotiations and definitive agreements. Utilizing a letter of intent template business purchase can be tremendously helpful for this purpose. These templates are designed with meticulous attention to detail that ensures important terms are not overlooked, protecting the interests of all parties involved. Furthermore, these customizable templates save time and effort, keeping the focus on the negotiation process.

Equally important is the benefit of reviewing a sample letter of intent to purchase a business before drafting your own. Such a sample provides practical guidance and a clear demonstration of how to structure this critical document, helping prospective buyers communicate their intentions effectively. Remember, the success of the negotiation and transition process relies heavily on the careful construction of this letter of intent.

Business Purchase Letter of Intent Preview