What is in the LOI?
The Letter of Intent summarizes key points: purchase price (or valuation logic), structure, exclusivity period, timeline. It is typically not legally binding – except for exclusivity and confidentiality.
Exclusivity: caution advised
Exclusivity obliges the seller to negotiate only with one buyer. The longer the period, the higher the risk if negotiations fail. Short exclusivity (2–4 weeks) plus clear milestones protects the seller.
Other important points
Purchase price structure (cash vs. earn-out), break fees, scope of due diligence – all negotiable. M&A advisors and lawyers ensure the LOI forms a solid basis for further negotiations.