Master the art of LOI negotiation with expert guidance on key terms, strategies, and best practices
Get LOI SupportA Letter of Intent (LOI) is a non-binding agreement that outlines the key terms and conditions of a proposed M&A transaction. It serves as a roadmap for negotiations and establishes the framework for due diligence.
While most provisions are non-binding, certain elements like exclusivity, confidentiality, and process terms are typically binding on the parties.
Establishes serious intent to proceed
Provides exclusivity period for negotiations
Outlines due diligence process and timeline
| Term | Typical Range | Key Considerations |
|---|---|---|
| Exclusivity Period | 60-90 days | Balance thoroughness with market timing |
| Break-up Fee | 1-3% of transaction value | Reflects deal size and complexity |
| Due Diligence | 30-60 days | Scope should match transaction complexity |
| Earnout Period | 1-3 years | Based on business predictability |
| Escrow Amount | 10-20% of purchase price | Risk profile and warranty scope |
Initial terms discussion
LOI drafting and negotiation
LOI execution
Due diligence phase
Significant gaps between buyer and seller valuation expectations that aren't addressed in the LOI.
Solution: Include valuation methodology and key assumptions
Insufficient time or scope for proper investigation leading to surprised discoveries.
Solution: Build in adequate time and comprehensive scope
Setting closing conditions or timelines that are impossible to achieve.
Solution: Realistic planning based on transaction complexity
Get expert guidance on LOI negotiation and valuation support for your M&A transaction