Letter of intent

When a buyer decides to take the next step of due diligence, before, a document is produced to validate the intentions of a transaction.

This list is not exhaustive but an overview of the most frequently encountered clauses. Each case is specific and has its peculiarities….

There are many important points to cover, between of them we can find:

  • Confirmation of the parties involved: who is the Buyer, we are talking about what (all actions or part)
  • Price: what is the proposed amount, is it firm or determined according to multiple methods
  • Inclusions / exclusions: what is the working capital level, are there any adjustments?
  • Payment: what is the balance of sale, what are the payment methods?
  • Due diligence conditions: what remains to be finalized? the accounting and legal part are normal, for assets do we need to have inspections, assessments, or other aspects to understand and estimate the risk – especially operations?
  • Date: for the end of the due diligence, the confirmation of the financing, and the closing
  • Required transition: how long, from whom, for how much?
  • Commercial conditions: representations and guarantees, or certificates, recognition of broker and fees, non-transfer of the offer,
  • Exclusivity: is it absolute, until when?

Don’t be surprised if the first offer is not accepted, is the beginning of negotiations. Depending on the approach, many of these aspects may have been clarified in advance …