The business purchase letter of intent documents the agreement between a seller and a purchaser to purchase an asset, covering all of the terms and conditions associated with the transaction. Assets can include property, corporations, investments such as stocks and bonds as well as products. Topics that are typically included are due diligence, inspection, schedules, pricing, and any special conditions associated with the transaction. Both parties should negotiate in good faith and the document only becomes binding when both parties have initialed all pages and signed the document in the appropriate space provided.
The business purchase letter of intent is primarily about communications, terms, and conditions to avoid any misunderstandings that might jeopardize the agreement. It helps to avoid assumptions that sometimes can place an agreement in jeopardy.
Sample Business Purchase Letter of Intent
Effective Date: The date this letter becomes effective.
Subject: Brief description of the asset under consideration
The Purchaser: Legal name of the individual, company, or trust
The Seller: Legal name of the individual, company, or trust
The Asset: Legal name of the asset, (business name, investment trust, etc.)
The Asset Purchase Price: Price paid for a percentage of the Asset
Asset Description: Description of the asset – Property Name, address, common shares, preferred shares, trust description
Legal Description: Other information in addition to asset description recognized by the courts
Payment Schedule: Payment in stages, at closing, and the agreed amounts
Financing Plan: State any conditions associated with financing
Legal Enforcement: State conditions of a binding agreement and any state or federal jurisdictions governing the agreement
Operating Bank Accounts: minimum amounts to be maintained in all accounts until closing
Formalized Agreement: This letter of intent is considered binding once signed by both parties
Seller Conduct: Seller agrees to operate the asset in the best interests of the asset without disrupting the day to day operations and value of the asset until closing
Closing Schedule: Scheduled date of closing or transfer of ownership to the purchaser and dates for terms of the agreement to meet
Closing costs: The purchaser agrees to assume all costs for closing
Expiry: Date the Letter of Intent expires, if the purchase has not closed or a formal agreement has not been executed.
Information Access: The purchaser’s advisors shall have full access to all account and operating information associated with the asset
Material Return: All information and material must be returned to the seller by the purchaser if the agreement cannot be completed.
Conditions: The purchaser must review all materials associated with the asset to their satisfaction. State any other conditions that may be required to be included associated with the purchase, e.g. review and approval of all materials; reasonable opportunity to search and complete due diligence; communicate with clients, employees, customers, vendors, and tenants or other 3rd parties.
Confidentiality: Mutual written consent is required before the release of press releases or public releases, discussions with 3rd party advisers, internal employees as per this agreement and/or required by state or federal laws.
Negotiating in Good Faith: All parties agree to act in good faith and diligently to execute the formal agreement and the closing.
Exclusivity: Once the letter of intent is signed by both parties, they agree to avoid or enter into discussions or negotiations with other parties unless specified in the conditions.
Standstill Agreement: the seller agrees to not sell any portion of the asset until the closing date once the letter of intent has been signed by both parties.
Currency: Define the currency to be used for the transaction, i.e. US Dollar
Law Governing the Agreement: State or federal laws governing the agreement
Severability: If a provision or phrase in the letter of intent is deemed to be invalid, unenforceable, or illegal, the remaining provisions shall be unaffected and unimpaired
Electronic and Counterpart Communication: Delivery of the Letter of Intent of a signed copy by electronic means including facsimile capable of producing a printed copy shall be deemed to be a successful transmission and deemed to be an original.
Signatures: The parties signing the document should be authorized representatives of both the seller and the purchaser.
Seller ____________ Date______________
Print Name _____________________
Business Purchase Letter of Intent (Word Template)
The Business Purchase Letter of Intent represents the formal agreement between several parties involved in the transaction. Each section should be discussed and agreed to before initializing agreement to each page. The parties may add sub-agreements as needed to describe in more detail specific details that may need to be included. These sub-agreements should be referenced in the letter of intent.