Letter of Intent (LOI)
Drafts a transaction LOI that advances execution while preserving negotiating flexibility. Default posture: non-binding except explicitly designated provisions.
Prerequisites
- Party identities, entity forms, and governing jurisdictions.
- Transaction type and structure (asset sale, stock sale, merger, investment, JV, option).
- Agreed economics: price, payment schedule, earn-outs, escrows, caps.
- Timeline: signing target, exclusivity window, diligence period, closing date.
- Conditions precedent and responsibility allocation (regulatory, financing, consents).
- Binding vs non-binding designation for each term set.
- Known constraints: antitrust, sector regulations, board/lender approvals.
Output Structure / Process
Produce an audit-ready LOI in business-letter format using this sequence.
1) Intake Validation
2) Clause Matrix
| Section |
Required? |
Binding? |
| Date / Parties / Purpose |
Yes |
Non-binding |
| Transaction Overview |
Yes |
Non-binding |
| Principal Terms (price, structure, adjustments) |
Yes |
Non-binding unless stated |
| Conditions Precedent |
Yes |
Non-binding |
| Definitive Agreement Process |
Yes |
Mixed |
| Exclusivity / No-Shop |
Optional |
Usually binding |
| Confidentiality |
Optional/Yes |
Usually binding |
| Expenses / Costs |
Optional |
Usually binding |
| Liability Limitation / No-Action |
Optional |
Usually binding |
| Governing Law / Disputes |
Yes |
Binding |
| Signatures / Counterparts |
Yes |
Binding |
3) Drafting Rules
- Always include a plain-language binding-effect section with an enumerated list of binding carve-outs.
- Include no-liability clause for failure to close and good-faith negotiation language for definitive agreements.
- Keep conditions precedent objective, verifiable, and assigned to a responsible party.
- Do not embed tax opinions; use a placeholder for tax allocations.
- Definitive agreement controls if conflict with LOI.
4) Template Skeleton
[Date]
[Party A Name]
[Party B Name]
RE: Letter of Intent – Proposed [Transaction Type]
[Opening: parties + transaction purpose]
1. Transaction Overview
2. Transaction Structure
3. Principal Terms
4. Conditions Precedent
5. Binding Commitments (Confidentiality / Exclusivity / Costs / Governing Law)
6. Definitive Agreements and Timeline
7. Termination and Liability
8. Miscellaneous (integration, notices, counsel, no assignment)
9. Signature Blocks
5) Quality Gate
Guidelines
- Use clean drafting style; avoid overcommitment language in non-binding portions.
- Do not omit remedies for breach of expressly binding clauses.
- If existing NDA is signed, state LOI is supplemental and preserve NDA hierarchy.
- For regulated sectors, add counsel review notes on approvals and filing requirements.
- For cross-border transactions, flag foreign-law and conflict-of-laws risk.
- If anti-circumvention concern exists, add carve-outs and enforcement language for exclusivity.
1---2name: letter-of-intent-loi3description: Drafts U.S. corporate transaction Letters of Intent (LOI) for mergers, acquisitions, investments, and strategic alliances. Separates non-binding intent from enforceable obligations and defines deal structure, key economics, and closing path. Use when converting deal terms into a preliminary transaction document. Trigger keywords: "LOI", "letter of intent", "M&A LOI", "merger term sheet", "no-shop", "exclusivity", "deal letter".4license: Apache-2.05---67# Letter of Intent (LOI)89Drafts a transaction LOI that advances execution while preserving negotiating flexibility. Default posture: non-binding except explicitly designated provisions.1011## Prerequisites12131. Party identities, entity forms, and governing jurisdictions.142. Transaction type and structure (asset sale, stock sale, merger, investment, JV, option).153. Agreed economics: price, payment schedule, earn-outs, escrows, caps.164. Timeline: signing target, exclusivity window, diligence period, closing date.175. Conditions precedent and responsibility allocation (regulatory, financing, consents).186. Binding vs non-binding designation for each term set.197. Known constraints: antitrust, sector regulations, board/lender approvals.2021## Output Structure / Process2223Produce an audit-ready LOI in business-letter format using this sequence.2425### 1) Intake Validation2627- [ ] Party names and addresses complete.28- [ ] Transaction purpose stated in one unambiguous sentence.29- [ ] Economic terms fully defined and internally consistent.30- [ ] Timeline mapped to conditions precedent.31- [ ] Definitive documents identified (SPA, merger agreement, ancillaries).32- [ ] Binding clause set explicitly chosen by user.33- [ ] Governing law and jurisdictional basis confirmed.3435### 2) Clause Matrix3637| Section | Required? | Binding? |38|---|---|---|39| Date / Parties / Purpose | Yes | Non-binding |40| Transaction Overview | Yes | Non-binding |41| Principal Terms (price, structure, adjustments) | Yes | Non-binding unless stated |42| Conditions Precedent | Yes | Non-binding |43| Definitive Agreement Process | Yes | Mixed |44| Exclusivity / No-Shop | Optional | Usually binding |45| Confidentiality | Optional/Yes | Usually binding |46| Expenses / Costs | Optional | Usually binding |47| Liability Limitation / No-Action | Optional | Usually binding |48| Governing Law / Disputes | Yes | Binding |49| Signatures / Counterparts | Yes | Binding |5051### 3) Drafting Rules5253- Always include a plain-language binding-effect section with an enumerated list of binding carve-outs.54- Include no-liability clause for failure to close and good-faith negotiation language for definitive agreements.55- Keep conditions precedent objective, verifiable, and assigned to a responsible party.56- Do not embed tax opinions; use a placeholder for tax allocations.57- Definitive agreement controls if conflict with LOI.5859### 4) Template Skeleton6061```text62[Date]63[Party A Name]64[Party B Name]6566RE: Letter of Intent – Proposed [Transaction Type]6768[Opening: parties + transaction purpose]69701. Transaction Overview712. Transaction Structure723. Principal Terms734. Conditions Precedent745. Binding Commitments (Confidentiality / Exclusivity / Costs / Governing Law)756. Definitive Agreements and Timeline767. Termination and Liability778. Miscellaneous (integration, notices, counsel, no assignment)789. Signature Blocks79```8081### 5) Quality Gate8283- [ ] Defined terms consistent throughout (Transaction, Closing Date, Effective Date, CPs).84- [ ] All amounts specify currency, basis, and payment schedule.85- [ ] Non-compete references included only if jurisdictionally supportable and requested.86- [ ] Public-company-sensitive language flagged with compliance review placeholder.8788## Guidelines8990- Use clean drafting style; avoid overcommitment language in non-binding portions.91- Do not omit remedies for breach of expressly binding clauses.92- If existing NDA is signed, state LOI is supplemental and preserve NDA hierarchy.93- For regulated sectors, add counsel review notes on approvals and filing requirements.94- For cross-border transactions, flag foreign-law and conflict-of-laws risk.95- If anti-circumvention concern exists, add carve-outs and enforcement language for exclusivity.
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