Like any other contract or written agreement, letters of intent are important business documents that record the terms discussed in negotiations for a particular transaction. Accomplishing a variety of business objectives, when writing a letter of intent, one wants to make sure to include the following four elements:
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Terms and Condition
In most situations – other than for buyers of a business – letters of intent should establish as many details as possible to describe future transactions. Some of the elements include: (1) the manner of transaction, (2) the time frame for the transaction, (3) how work will be completed, and (4) information about the appropriate parties involved in the transaction. The importance of adding details to the letter of intent is to eliminate any possible future disagreements about how transactions should occur and to ensure that future transactions are detailed and come as closely as possible in fulfilling an individual’s wishes without requiring future documentation. Buyer’s of a business may want less detail in the initial letter of intent as they may use that as negotiating strategy once the seller has committed, at least emotionally, to the deal.
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No-Shop Provisions
If you are the potential buyer of a business, a no-shop provision prevents the seller parties involved in a transaction from obtaining quotes or otherwise negotiating with other potential buyers between the time of the signing of the letter of intent and the closing of the transaction. The existence of a no-shop provision is to prevent the seller from using the buyer’s offer as a tool to shop around the deal.
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Confidentiality Provisions
If you are the potential seller of a business, you want to make sure – unless you have a previously signed non-disclosure agreement – that the letter of intent includes a strong confidentiality and non-solicitation provision, especially if the proposed buyer is a competitor.
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Conditions to Close
While letters of intent must include details describing future transactions, they should also outline what conditions must occur for a deal to close. The inclusion of the closing conditions helps ensure that the proper terms are satisfied prior to the occurrence of the transaction.
If you need help and guidance in writing a professional and inclusive letter of intent then you have come to the right place. Afshin Hakim of Hakim Law Group is one of the leading business lawyers in Los Angeles . His experienced and expertise will lead you to success.
For further information or to schedule an appointment please contact Hakim Law Group at 310.993.2203 or visit www.HakimLawGroup.com.
