LOI (Letter of Intent)

A mostly non-binding document setting out the proposed terms of an acquisition before full diligence.

Example

Price, structure, exclusivity period and timeline.

Important

The exclusivity clause IS binding — it stops you talking to anyone else. Signing one ends your leverage, so negotiate the important terms first.

Related terms

  • M&A (Mergers & Acquisitions) — One company buying or combining with another.
  • Due diligence — The investigation a serious investor or acquirer runs before completing a deal — financial, legal, technical, commercial.
  • Term sheet — A short, mostly non-binding document setting out the main terms of an investment before the full legal documents are drafted.

Lessons that explain it

  • How an acquisition actually runs — Approach, LOI, diligence, negotiation, close. The exclusivity clause is where founders lose their leverage. (12 min)

All 176 terms in the Founder glossary