Business Letter of Intent

A business letter of intent is a document that declares a commitment by one party to transact business with another party. It basically outlines the core terms and conditions that are to govern a particular deal. This document is widely used in major business transactions and bears a striking semblance to term sheets. It is not final or binding. Either party may walk out of it if it deems the letter untenable.

Why a Letter of Intent is Necessary?

Describes the detailed information necessary for a final deal

This letter provides detailed information that is required for a final deal to be sealed. These pieces of information enable the two parties to arrive at a more amicable decision. It also eliminates any ambiguities that have been known to confuse the parties and give rise to unnecessary legal tussles.

Grants the parties topmost priorities

Under the existing laws, the two parties involved are entitled to first priorities when engaging in a business transaction. This is made possible by the “right of first refusal” that somehow binds them to the course for which they shall have appended their signatures.

Improves the credibility of the business concerned

Those entities that opt to draft and sign this document are more likely to be viewed favorably than those that do not. Moreover, the document itself gives the parties and their clienteles some assurance that they are indeed serious and bona fide. In this way, they stand better chances of inching deals and operating profitably.

Furnishes more information to the buyer

Even the buyers are not left out at all. They too get to enjoy the benefit of receiving more information that is crucial towards forming an opinion and making more informed decisions. They are particularly better placed to dig deeper into the business and anticipate any impending pitfalls that may have to be avoided.

Complies with statutory requirements

In some jurisdictions, the drafting of this letter is mandatory. No major transaction can be carried out. It hence goes that by drafting it, the business entities themselves tend to meet the qualifications necessary to conduct a viable business. That way, they also prevent unnecessary legal disputes that potentially arise.

When is the Letter of Intent Created?

In most cases, this letter is drafted at the start of a transaction negotiation process. This occurs at the initial stages of a business transaction when the two parties have barely sat and discussed the finer details of the transaction. It mainly signifies that the two parties are ready to launch deeper and to deliberate before inching a deal at a closing date later.

How to Write a Business Letter of Intent

Step 1: address the letter accordingly

Kick start the exercise by addressing the letter accordingly. You have to identify the recipient precisely. This is the name of the business manager or the person who is actually going to receive the letter. The purpose of this personalized approach is to create a connection with the reader.

Step 2: introduce yourself

Move now to introduce yourself. What is your name and why are you suited for this purpose of drafting the letter? As the identity of the recipient above, this one also serves to create a personalized connection with the reader. It also serves the purpose of conferring credibility to the reader.

Step 3: state your purpose deeper

Get down to the core of the letter now. It is at this stage that you explain to your reader why you have deemed it necessary to enter into a business agreement with him. The manner in which you handle this issue has the capacity to make or break the situation. You should be straight and to the point, without mincing words.

Step 4: include a request for a response

After you are through with the entire letter, you should request the reader to respond to it appropriately. Particularly, you should express a desire for a one-on-one interview with the business manager if possible. This will definitely require that you furnish your contact details that will be used for a follow-up interview.

Step 5: proof-read and submit

Like any other letter, you have to proof-read and edit the letter before submitting. A letter that is full of grammatical issues is often misconstrued to be reckless and not serious. Moreover, some errors have the impacts of altering the meaning and intents of the letters. You do not want these to happen at all.

Sample business letter of intent

Henry wilkinson,

Operations manager,

Henry printing press,

150 north capitol boulevard,

Boise 83701, idaho

United states

01-04-2020

Diana pearson,

Production manager,

Boise stationers limited,

619 west main street,

Boise 83709, idaho

United states

Dear madam

Re: business letter of intent

Ours is a printing press that is located at the heart of boise, idaho. We do engage in the production of unique calendars, stationery, and other literature. Given that, yours is an enterprise that deals in stationery, we have figured out that you may from time to time require our services.

A.) Scope of our cooperation

We suggest that our cooperation remains at the professional level. Working with you should not mean entering into some kind of covenant, merger, or lasting agreement. Moreover, it shall be terminated at any time that either party no longer deems it tenable.

B.) Services rendered

If our business deal goes through, we expect to:

  • Print the cards and other vital pieces of stationery
  • Color the documents and calendars uniquely
  • Imprint designs and other decorations on the cards
  • Cutting and shredding the papers in desired shapes
  • Packaging the pieces of stationery as per your expectations

C.) Closing date

Whereas we have not delineated a specific date for the deal to sail through, we acknowledge that time indeed is of the essence. For this reason, we suggest that you do the much you can to bring the entire document to fruition within the shortest time possible.

D.) Conditions for closing

This agreement shall only be deemed valid if it certifies the preconditions laid down by the state of idaho. Among these are that:

  • Any litigations that arise in the course of use be subject to the state and federal laws
  • Preservation of the character, vision, and mission of the business in its present form throughout the duration of the agreement
  • Either party refrains from filing bankruptcy or insolvency to maintain its stature in a reliable form.
  • Advance notification of the two parties prior to any amendments or changes in mind

E.) The character of our agreement

Being purely a ‘business letter of intent,’ this letter is no way binding. On the contrary, it merely indicates an intention to work with you. Feel free to reach us for a change of course or mind.

If after reading the explanations above, you find our terms favorable, we now ask that you countersign the letter and return it to us within the shortest duration of time.

It is our hope that you shall return positive feedback.

Henry wilkinson,

Operations manager,

Henry printing press limited

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    Tips for writing a letter of intent

    Tip i: use the right format for the letter

    For a start, you should use the right format for the letter. Though this is a business letter, it has to take a professional tone and structure. Thus, the language you use as well as the corresponding writing style both ought to line up with that very theme.

    Tip ii: carry out a thorough background research of the company

    Before jotting down the letter, you have to carry out a thorough background research of the company you are addressing. That is because different companies have varying policies that govern their operations and business deals. Such research will determine the best possible approach to engaging them.

    Tip iii: format the contents legibly

    Legibility is key to the understanding of your letter. That is why it is something you want to approach with an above-average level of seriousness. Use bullets extensively in your letter. Then again, you should leave single spaces in between any two lines. Your choice of font and the sizes will also determine to a greater extent the legibility of your letter.

    Tip iv: maintain it brief and concise

    In all, you should maintain your letter brief and concise. Be sure to incorporate only those points that matter to the entire scope and intent of the letter. Making the letter too long will most likely bore the reader besides making him get lost along the way.

    Tip v: proof-read the letter before submitting

    As always, you should always proof-read the letter before submitting the same. While at it, you should weed out any grammatical issues that may interfere with the meaning and scope of the letter. Use premium grammar editing tools like grammarly to do the job.

    Conclusion

    Our long look into the business letter of intent comes to an end there. We now trust that you are properly equipped to do a satisfactory job. This being the case, we now challenge you to embark on the task of drafting the letter for your future correspondences.