A letter of intent (LOI) is an essential step in the merger and acquisition (M&A) process, yet its exact purpose and content might be widely unknown. Furthermore, there are several popular misconceptions about these agreements and exactly what their role is in the process of selling a company.
Essentially, a letter of intent is what it sounds like — an agreement between parties that lays out the structure of the deal and the intent of both parties to follow through with it. There are several key sections in a basic LOI, which are outlined below.