Tuesday, December 07, 2010 10:51:56 AM
One of the first steps in the merger and acquisition ("M&A") process after executing a confidentiality agreement ("Confi") or non-disclosure agreement ("NDA") is the issuance of a non binding letter of intent. A letter of intent, referred to as the "LOI", is a legal document that is provided to show interest in progressing with a transaction, such as to purchase, joint venture or merger.
An LOI is a nonbinding legal agreement that not only expresses interest, but typically details the initial terms for the contemplated transaction, timing for due diligence, any contingencies (financing, Board approval, etc.), and specifies the timing to execute a final definitive agreement and close the transaction.
While this document is not legally binding, the LOI is an important part of a purchasing process because it typically means that both parties have fundamentally agreed on a purchase price, basic terms of the deal and have agreed to negotiate exclusively with each other.
(From: http://ezinearticles.com/?Merger-and-Acquisitions-Series---Non-Binding-Letter-of-Intent&id=3673848)
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