Offers to Purchase and/or Letters of Intent

When acting for a buyer, we like to prepare a basic document setting out the key points of a transaction, then commit the seller to these points. A common way to accomplish this is to draft a Letter of Intent in which the following are set out:

  • Purchase Price;
  • Deposit – amount; paid to whom; date when refundable and date by which it becomes non-refundable;
  • Completion Date;
  • Transaction Structure (Assets or Shares);
  • Due Diligence conditions and the date by which they must be removed (which is normally when the deposit becomes non-refundable); and
  • Deliveries –  what must the seller provide to the buyer to complete its due diligence, and by when must this information be provided. Such deliverables normally include, as applicable, company records book, partnership or shareholders’ agreement, material third party agreements, licenses, lease(s), asset lists, valuations, franchise agreements financial statements;

A Letter of Intent can be binding or non-binding.  It is simplistic by a helpful way to set out the key details of a transaction so that the parties can ensure they are in agreement, and so that their professional advisors may have a base from which they can construct the appropriate legal documents.

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