Letter of Intent: Asset Acquisitions

by Practical Law Corporate & Securities

A Standard Document outlining a letter of intent for the purchase and sale of a division or line of business of a private US corporation, drafted in favor of the buyer. This document serves as a preliminary agreement setting forth the principal terms of the proposed transaction, including the acquisition of substantially all assets and certain specified liabilities. It specifies the purchase price, payment terms, and conditions such as due diligence, corporate approvals, and receipt of necessary consents. The letter of intent emphasizes the non-binding nature of its business terms while including binding provisions on exclusivity, confidentiality, and expenses. It also highlights the requirement for negotiating a definitive purchase agreement and ancillary agreements. The document addresses potential adjustments to the purchase price based on working capital at closing and includes provisions for an escrow to secure post-closing obligations. The letter of intent underscores the importance of confidentiality and exclusivity during negotiations. This document is crucial for identifying deal breakers early and enhancing commitment to the transaction process.