Letter Of Intent Template

Subject: Letter of Intent for the Acquisition of Company by Acquirer

Dear [CEO.FirstName] ​[CEO.LastName],

This letter confirms your and our mutual intent with respect to the potential transactions described herein between [Sender.Company] (“Buyer”, “us”, “our”) and [CEO.Company] (“CEO”, “you”, or “your”), including its shareholders.

We appreciate the time and energy your team has put into discussing this opportunity with us and thank you for all the information that you have provided us thus far. This document, in and of itself, does not represent an enforceable legal contract.

As we continue to spend time evaluating [CEO.Company], we believe that transacting with [Sender.Company] can provide unique value and capabilities to help accelerate growth for both your company and ours.

Based upon our preliminary review of the information provided to us by [CEO.Company] we are pleased to present to you this non-binding letter of intent for a transaction between [Sender.Company] and [CEO.Company] in order to benefit both of our companies, monetarily or through growth.

We believe that in order for this transaction to be successful, all parties must have their interests aligned. With that in mind we have outlined a compensation structure in this letter of intent, as follows.

WHEREAS, Buyer is interested in acquiring all of the outstanding stock (“Shares”) of Company / CEO, and will be performing certain due diligence with respect to CEO’s corporation; and

WHEREAS, Buyer and CEO intend to negotiate the substantive terms of such acquisition, including the terms of Buyer’s employment agreements with certain key employees and executives of CEO;

NOW, THEREFORE, the parties enter into this Letter of Intent as follows:

1. Terms

The principal terms of the proposed transaction are as follows:

a. Timeline

Given the importance of timing for [CEO.Company] in respect to the transaction, we have outlined the following timeline as follows:

On (Date), we will begin with the financial due diligence and valuation work to confirm whether [CEO.Company] will be a good fit for the transaction.

On (Date), we will begin with operational diligence and conduct a visit to your office for the same. From (Date) onwards, we will begin drafting a definitive agreement and, once completed, send over the same for your perusal.

b. Due Diligence Process

This transaction is of the highest priority for [Sender.Company], and we are prepared to proceed as quickly as possible. Hence, it is important that [CEO.Company] makes that same commitment to us before we expend additional time and resources pursuing this opportunity.

We have developed an investment schedule and an understanding of the business through our initial due diligence, including but not limited to, several conversations with management as well as a preliminary data review. We expect our remaining due diligence to include, but not necessarily limited to, commercial, accounting, and financial due diligence, as well as the customary legal, tax, and regulatory work.

​[Sender.Company] expects [CEO.Company]’s full cooperation; we believe such cooperation allows us to expeditiously complete our due diligence and move on to drafting a definitive agreement for our transaction as discussed in the schedule detailed above.

c. Due Diligence Review

Promptly following the execution of this Letter of Intent, you will allow us to complete our examination of your financial, accounting, and business records and all contracts and other legal documents, and to generally complete due diligence. Any information obtained by us as a result thereof will be maintained by us in confidence subject to the terms of the Non-Disclosure Agreement (the “NDA”) executed by the parties and dated as of (Date). The parties will cooperate to complete due diligence as expeditiously as possible.

d. Real and Effective Acquisition

Subject to successful completion of all due diligence, and the successful negotiation of a purchase price for the Shares, [Sender.Company], as Buyer, would acquire the Shares.

e. Consideration

The aggregate purchase price for the Shares is to be negotiated between the parties in good faith, provided that the Purchase Agreement (as defined below) and employment agreements can be successfully negotiated concurrently with each other.

f. Definitive Purchase Agreement

All of the terms and conditions of the proposed transactions would be stated in the Purchase Agreement and employment agreements, to be negotiated in good faith concurrently with each other, and if agreed, executed by you and us. Neither party intends to be bound by any oral or written statements or correspondence concerning the Purchase Agreement or employment agreements arising during the course of negotiations, notwithstanding that the same may be expressed in terms signifying a partial, preliminary, or interim agreement between the parties.

g. Conduct in Ordinary Course

In addition to the conditions discussed herein and any others to be contained in a definitive written stock purchase agreement (the “Purchase Agreement”), the consummation of the acquisition would be subject to having conducted your business in the ordinary course during the period between the date hereof and the date of closing, and there having been no material adverse change in your business, financial condition or prospects. CEO and [CEO.Company] shall not be liable in the event of any Buyer determination that [CEO.Company] did not conduct its business in the ordinary course, or for any adverse changes Buyer may deem to have occurred.

h. Contract of Employment

Simultaneously with the execution of the Purchase Agreement, [Sender.Company] will offer employment to the following individuals currently employed by [CEO.Company] and you hereby agree to accept such employment, subject to the negotiation of mutually acceptable employment agreements, it being understood that the term of such employment agreements will be for a period of not less than three (3) years.

2. Expenses & Limitation of Liability

Both [Sender.Company] and [CEO.Company] are responsible for, and will pay the entirety of, their own company’s respective expenses incurred from or associated with this Letter of Intent, the Purchase Agreement, the employment agreements, and the transactions contemplated hereby and thereby. NEITHER PARTY SHALL BE RESPONSIBLE FOR EXPENSES INCURRED BY THE OTHER PARTY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY CAUSE WHATSOEVER ARISING UNDER THIS LETTER OF INTENT.

3. Public Announcements

Neither party will make any announcement of the proposed transaction contemplated by this Letter of Intent prior to the execution of the Purchase Agreement and employment agreements without the prior written approval of the other party, whose approval will not be unreasonably withheld or delayed. The foregoing shall not restrict in any respect your or our ability to communicate information concerning this Letter of Intent and the transactions contemplated hereby to your and our, and your and our respective affiliates, officers, directors, employees, and professional advisers, and, to the extent relevant, to third parties whose consent is required in connection with the transaction contemplated by this Letter of Intent.

4. Broker’s Fees

All parties have represented to each other that no brokers or finders have been employed who would be entitled to a fee by reason of the transaction contemplated by this Letter of Intent.

5. Exclusive Negotiating Rights

In order to induce us to commit the resources, forego other potential opportunities, and incur the legal, accounting and incidental expenses necessary properly to evaluate the possibility of acquiring the outstanding capital stock and business described above, and to negotiate the terms of, and consummate, the transactions contemplated hereby, including the employment agreements, you agree that for a period of ninety (90) days after the date hereof, you, your affiliates and your and their respective officers, directors, employees and agents shall not initiate, solicit, encourage, directly or indirectly, or accept any offer or proposal, regarding your employment and/or the possible acquisition of substantially all outstanding capital stock of Company by any person other than us, including, without limitation, by way of a purchase of majority shares, purchase of substantially all assets or merger, of all or any substantial part of your equity securities or assets, and shall not (other than in the ordinary course of business as heretofore conducted) provide any confidential information regarding your assets or business to any person other than us and your and our representatives, without our prior written consent.

​In light of our Proposal’s premium valuation, we believe that granting exclusivity at this stage will benefit [CEO.Company], [Sender.Company] and our respective shareholders.

6. Confidentiality

​[Sender.Company] will need reasonable access to [CEO.Company]’s information and the capability to share that information with our potential equity partners and debt financing sources in a way that protects the confidentiality of your information and our discussions in order to complete our due diligence and secure the additional required capital. Please find attached a draft of our NDA that ensures confidentiality for both your company and ours. We place emphasis on our desire to complete the proposed transaction as quickly and effectively as possible and our readiness to mobilize resources to get things started right away. To that end, and presuming that we formally execute this letter, we would recommend scheduling an organizational meeting as soon as possible to finalize the work schedule.

7. Miscellaneous

This letter shall be governed by the substantive laws of [Sender.Country], [Sender.State]. This letter, together with the aforementioned NDA, constitutes the entire understanding and agreement between the parties hereto and their affiliates with respect to its subject matter and supersedes all prior or contemporaneous agreements, representations, warranties and understandings of such parties (whether oral or written). No promise, inducement, representation or agreement, other than as expressly set forth herein, has been made to or by the parties hereto.

This letter may be amended only by written agreement, and only if signed by the parties to be bound by the amendment. Evidence shall be inadmissible to show agreement by and between such parties to any term or condition contrary to or in addition to the terms and conditions contained in this letter.

This letter shall be construed according to its fair meaning and not strictly for or against either party.

8. No Binding Obligation

THIS LETTER OF INTENT DOES NOT CONSTITUTE OR CREATE, AND SHALL NOT BE DEEMED TO CONSTITUTE OR CREATE, ANY LEGALLY BINDING OR ENFORCEABLE OBLIGATION ON THE PART OF EITHER PARTY TO THIS LETTER OF INTENT. NO SUCH OBLIGATION SHALL BE CREATED, EXCEPT BY THE EXECUTION AND DELIVERY OF THE PURCHASE AGREEMENT AND EMPLOYMENT AGREEMENTS CONTAINING SUCH TERMS AND CONDITIONS OF THE PROPOSED TRANSACTIONS AS SHALL BE AGREED UPON BY THE PARTIES, AND THEN ONLY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH PURCHASE AGREEMENT AND EMPLOYMENT AGREEMENTS.

The NDA is hereby ratified and confirmed as a separate agreement between the parties thereto.

9. [Sender.Company]’s Offer

Based on our assessment of [CEO.Company]’s current status in the market, its structure, future forecasts, predictions, and excellence in customer service, we would be able to offer a total purchase price of $ (Amount).

This amount includes the following:

1. $(Amount) for transfer of ownership.

2. $(Amount) for (Number) company shares under [Sender.Company]’s name.

3. $(Amount) for the following assets: (include names of all assets included).

If the foregoing terms and conditions are acceptable to you, please so indicate by signing this letter where indicated below and returning it to the attention of the undersigned.

Sincerely,