Letter of Intent to Purchase Stock

Letter of Intent to Purchase Stock

Last updated April 2nd, 2023

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letter of intent to purchase stock is a preliminary agreement that outlines a buyer’s intention to purchase a specific quantity of a company’s shares at a specified price. The letter generally sets forth the transaction terms, such as the purchase price, payment schedule, confidentiality clauses, and the buyer’s right to conduct due diligence. The letter is the first step in the purchasing process before the parties enter into a legally binding agreement.


What to Include

The following information is often found in a successful stock purchase letter of intent:

Buyer and Seller Information

The name and address of the individual or company intending to purchase stock should be included as one of the first things in the document. The name and address of the company whose stock the buyer intends to purchase should also be included.

Stock Information

The number of shares and the proposed purchase price should be relayed in the document. The share class should be indicated as well. Companies may divide their shares into classes at their discretion; it is important that the buyer be aware of what class of share they are purchasing. Some common classifications are:

  • Executive Shares: These are high-value shares that have priority voting rights.
  • Common Shares: These shares often come with one vote per share and non-priority access to corporate assets and dividend payments.
  • Preferred Shares: This type of share generally does not have voting rights but pays designated dividends regularly.


The selling company will want to ensure a confidentiality provision is part of the letter of intent. This is because the buyer will typically want to perform due diligence and review sensitive information prior to purchasing the stock. The selling company will want to make sure the sensitive information won’t be used against them


The two parties will often agree not to engage in negotiations with other parties during the sale negotiations. If so, it should be stated in the document.


There are several benefits of using a letter of intent to purchase stock.

  1. It allows the buyer and seller to see if they agree on the overall deal before spending time, money, and resources on due diligence and drafting a formal agreement.
  2. It ensures both the buyer and seller clearly understand each other’s expectations and interest levels.
  3. A signed letter of intent can speed up any potential government regulatory requirements, such as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), which requires reporting large stock purchases before the transaction may be closed.
  4. The seller may use the letter as evidence to lenders or investors that a prospective sale is pending.


Download: PDF, Word (.docx), OpenDocument


Date: [DATE]



RE: Stock Purchase

This Letter of Intent to Purchase Stock (the “Letter”) sets forth the proposed terms and conditions of the Purchase described hereunder and shall govern the relationship between the Buyer and the Seller (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 BUYER[BUYER NAME] (the “Buyer”) with a mailing address of [ADDRESS].

2. THE SELLER[SELLER NAME] (the “Seller”) with a mailing address of [ADDRESS].

3. THE TRANSACTION. Unless otherwise agreed to by the Parties, the Buyer agrees to pay the Seller the amount of $[PURCHASE PRICE] (the “Purchase Price”) in exchange for [NUMBER OF STOCKS AND STOCK CLASS] (the “Transaction”).

4. ACCESS TO INFORMATION. After the execution of this Letter, the Buyer and their advisors shall be granted full access to any and all information about the Transaction.

5. CONFIDENTIALITY. The Seller and Buyer 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.

6. GOOD FAITH NEGOTIATIONS. The Buyer and Seller are expected to negotiate the terms of the Transaction herein in good faith.

7. INTENTION OF THE PARTIES. This Letter sets forth the intentions of the Parties to use reasonable efforts to negotiate, in good faith, a Definitive Agreement with respect to all matters herein. Notwithstanding paragraphs 4 through 6, which shall be legally binding, any legal obligations with respect to all other matters shall only arise if and when the Parties execute and deliver a Definitive Agreement.

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


Seller Signature: ___________________ Date: [MM/DD/YYYY]
Print Name: [SELLER NAME]

Buyer Signature: ___________________ Date: [MM/DD/YYYY]
Print Name: [BUYER NAME]