Business Proposal Letter of Intent Template

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A business proposal letter of intent (LOI) summarizes the proposed terms of a business deal with another party. It’s used at the start of negotiations to outline the potential terms and conditions for the transaction or business venture. The document helps establish the main elements before going into the more nuanced details of the partnership.

Business Proposal Letter of Intent Template

A business proposal letter of intent (LOI) summarizes the proposed terms of a business deal with another party. It’s used at the start of negotiations to outline the potential terms and conditions for the transaction or business venture. The document helps establish the main elements before going into the more nuanced details of the partnership.

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Last updated November 7th, 2024

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A business proposal letter of intent (LOI) summarizes the proposed terms of a business deal with another party. It’s used at the start of negotiations to outline the potential terms and conditions for the transaction or business venture. The document helps establish the main elements before going into the more nuanced details of the partnership.

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What to Include

A business proposal letter of intent should detail the basic terms of a future transaction. After the parties accept the letter’s terms, a more detailed agreement is typically drafted.

Party Information – The names of the individual or company submitting the proposal and the recipient.

Transaction Type – The type of transaction, such as an investment, business purchase, partnership, etc.

Payment Details – How much the potential transaction will cost, who will be paid, and what percentage of ownership interest the buyer will receive for their investment.

Due Diligence and Investment Conditions – A legal provision stating the investor’s intention to perform their due diligence and report their findings with other relevant parties.

Timelines – The transaction’s important deadlines, such as the letter’s effective date, signing date, and the deadline to enter into a formal agreement.

When to Use

A business proposal letter of intent is a valuable tool in negotiations, ensuring the parties are on the same page before finalizing a deal. It can be used for transactions such as:

  • Mergers and Acquisitions – A prospective buyer may use the letter to inform a business owner of their interest in purchasing the business.
  • Joint Ventures – Companies may use the form to establish how they will collaborate with another company on a project.
  • Real Estate Transactions – This form may be drafted by an interested buyer to begin negotiations with a property owner (typically in commercial real estate transactions).

Sample

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BUSINESS PROPOSAL LETTER OF INTENT

Date: [DATE] (the “Effective Date”)

[SENDER (e.g., INVESTOR) NAME] 
[SENDER STREET ADDRESS]
[SENDER CITY, STATE, ZIP]

[RECIPIENT (e.g., BUSINESS OWNER) NAME]
[RECIPIENT STREET ADDRESS]
[RECIPIENT CITY, STATE, ZIP]

RE: Business Proposal

This Business Purchase Letter of Intent (the “Letter”) sets forth the proposed terms and conditions of the Purchase described hereunder and shall govern the relationship between the Investor and Shareholder (the “Parties”) until replaced by a definitive, formal agreement addressing the same purchase and subject matter (the “Definitive Agreement”). The Purchase considered in this Letter and in the Definitive Agreement is subject in all respects to the following:

1. THE INVESTOR. [INVESTOR NAME] (the “Investor”) with a mailing address of [ADDRESS].

2. THE INVESTMENT. [INVESTMENT NAME] (the “Investment”).

3. INVESTMENT AMOUNT. $[INVESTMENT AMOUNT] (the “Investment Amount”), payable on the closing date set out in this Letter.

4. THE PRINCIPAL SHAREHOLDERS. [PRINCIPAL SHAREHOLDER NAMES] (the “Principal Shareholders”) are the main shareholders or owners of the Investment.

5. THE TRANSACTION. The Investor agrees to pay the Principal Shareholders the amount of $[INVESTMENT AMOUNT] for [OWNERSHIP PERCENTAGE]% ownership interest in the Investment.

6. INVESTMENT CONDITIONS. It shall be the obligation of the Investor to review all materials provided and, subject to the satisfaction of the Investor, enter into a formal agreement within [NUMBER] days after receiving all necessary materials. The conditions of the investment also include:

  1. The review and approval of all materials in the possession and control of the Principal Shareholders;
  2. The Investor and its advisors having had a reasonable opportunity to perform the searches and due diligence to their satisfaction;
  3. The Investor being able to communicate with necessary clients, customers, vendors, tenants, or other third parties necessary; and [ADDITIONAL CONDITIONS].

7. CLOSING. The closing (the “Closing”) is the act of closing the transaction where the Principal Shareholders exchange the Investment for the Investment Amount. The Closing shall occur: [CLOSING TERMS].

8. CONFIDENTIALITY. The Investor and Shareholders shall maintain the negotiations and pertinent information confidential and limited only to the parties’ advisors, internal staff, or other necessary third (3rd) parties. Press or public releases are prohibited without prior mutual written authorization from the parties or as required by law.

9. GOOD FAITH NEGOTIATIONS. The Investor and the Principal Shareholders agree to into good faith negotiations to execute a formal agreement or close the transaction.

10. EXCLUSIVE OPPORTUNITY. The parties shall refrain from entering into negotiations or discussions concerning the Business with any other party unless another agreement (e.g., option to purchase, first right of refusal, etc.) is already in place.

11. GOVERNING LAW. This Letter shall be governed under the laws of the State of [STATE NAME].

12. SEVERABILITY. In case any provision or wording in this Letter shall be held invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired.

13. SIGNATURES.

Investor Signature: ___________________ Date: [MM/DD/YYYY]
Print Name: [INVESTOR NAME]

Principal Shareholder Signature: ___________________ Date: [MM/DD/YYYY]
Print Name: [PRINCIPAL SHAREHOLDER NAME]