The Letter of Intent allows the key pillars of the intended corporate transaction to be defined at the beginning of the sales process.

It is an important building block for an orderly and structured sales process and thus serves as a guide for both the buyer and seller during the due diligence process. It also forms the framework for the purchase agreement. Without a fundamental understanding of all the transaction terms contained in a letter of intent, drafting a detailed purchase agreement can be lengthy and difficult.

The LOI should be carefully drafted and negotiated, as the commercial terms agreed therein are usually not deviated from or only insignificantly deviated from within the transaction, despite its supposed “non-binding nature.”

In cooperation with Dr. Julius Wedemeyer, LL.M. from the law firm Heuking Kühn Lüer Wojtek, DealCircle provides you with an overview of the key issues and core contents of an LOI in the context of a sales process.

However, this Practice Guide does not constitute legal advice. The information contained herein is not exhaustive and cannot replace individual advice tailored to the specific circumstances of each individual case.

Our Best Practice Guide shows you the structure and contents of the LOI:

• Purpose of the Letter of Intent

• Date of signing

• Parties to the Letter of Intent

• Description of the subject matter of the corporate transaction

• Special features of the transaction

• Strategic considerations

• Process and schedule

• Reservations, conditions for implementation

• Purchase price and purchase price mechanism, maturity and re-participation

• Liability regimes (guarantees, indemnities)

• Non-competition and non-solicitation clauses

• Exclusivity in favor of the buyer

• Binding nature of the Letter of Intent

• Other
  regulations