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Build your letter of intent

Which parts of this letter can actually bite? Now you can see.

Takes about 2 minutes

Build the letter

Vaultfish helps you run the process. We are not lawyers and this is not legal advice. If you need counsel who knows this area, we can point you to one. Ask for a referral

Skip to the letter

  1. Who is in the deal

    Which side are you on?

    Names stay on this page. The share link never carries them.

  2. Structure and price

    What kind of deal?
    Price

    Type 1.2m or 450k if you like. It stays on this page.

  3. How it is paid

    80%
    20%

    The two always add to 100, so the sliders move together.

    Earnout

  4. Timeline

    Exclusivity

    How long the seller stays off the market.

    If talks run past the exclusivity days
    Due diligence
    Closing target

    After the letter is signed.

  5. Extras

    Add any of these

  6. Records and data

    What happens to the company's records?

    Email, chat, CRM and tickets are their own asset. Name them or they go unmentioned.

    Which systems?

    Optional. They fill Schedule A.

    How many years of records?
    Who holds the rights?
    Anything left out?

  7. Fine print

    Leave blank and your lawyer fills it in.

    Optional. The confidentiality clause then points at the NDA you already signed.

    See the letter

4 binding clauses, 7 non-binding

Everything else is a handshake. These 4 are a contract.

Exclusivity ends about 45 days before your closing target. Choose "extends while we negotiate" or pick a longer period.

Letter of intent

[Date]To: [Seller name]From: [Buyer name]Re: Proposed sale of [Business name]

Dear [Seller name],

Proposed terms (non-binding)

Non-bindingA proposal, not a contract. Only the clauses tagged Binding hold anyone to anything.

1. Purpose of this letter

[Buyer name] ("Buyer") is interested in buying [Business name] ("the Business") from [Seller name] ("Seller"). This letter sets out the main terms Buyer proposes for that sale ("the Transaction").

Except for the binding terms at the end of this letter (confidentiality, exclusivity, expenses and governing law), this letter is not a binding agreement. Neither party has to go ahead with the Transaction until both sign a definitive agreement.

Non-bindingAsset deal or equity deal changes who inherits old liabilities. Ask your lawyer which fits.

2. Structure

The Transaction would be an asset purchase. Buyer would buy the assets of the Business and take on only the liabilities the definitive agreement lists.

Non-bindingA number to talk about, which due diligence can move.

3. Proposed price

The proposed purchase price is [Purchase price], subject to the adjustments in the definitive agreement.

Non-bindingCash up front, a seller note for the rest, and maybe an earnout. Pick whether the earnout is on top of the price or part of it, and the letter says so.

4. How the price is paid

80 percent of the price would be paid in cash at closing. The other 20 percent would be paid through a promissory note from Buyer to Seller. The term, interest rate and security for the note are to be agreed.

No earnout is proposed.

Non-bindingThe buyer's look under the hood, for a set number of days.

5. Due diligence

Buyer would carry out due diligence for 45 days after this letter is signed. Seller would give Buyer reasonable access to the books, contracts, staff, systems and records of the Business, under the confidentiality terms below.

Buyer's review would cover the Data Assets in Schedule A, including what rights Seller holds in them.

Non-bindingRecords are named as their own asset, so they do not slip through as an afterthought.

6. Data assets

The Business holds records that are a separate class of asset, called the Data Assets in this letter. Data Assets means the business records the Business holds, such as email, chat, CRM, support ticket, project and document records, together with whatever rights the Business has in them. Buyer proposes that the Data Assets go with the sale and are listed in Schedule A.

Schedule A will say which systems and which years are covered, who holds the rights, and what is left out. Records that contain personal data, privileged material or content that customer contracts restrict will be listed with their limits or left out. The definitive agreement will say how each one is handled.

Nothing in this letter sets a price on the Data Assets or promises any use of them.

Non-bindingThe real contract comes later. This is the plan to get there.

7. Next steps and timing

If due diligence goes well, the parties would work toward a definitive agreement and aim to close about 3 months after this letter is signed. Closing depends on the definitive agreement, the results of due diligence and any approvals or consents the parties need.

This proposal ends if it is not accepted by [Expiry date].

Binding terms

BindingBoth sides keep it quiet, even if the deal falls through.

8. Confidentiality

Each party will keep the existence and terms of this letter, and all non-public information it gets about the other party or the Business, confidential. It will use that information only to judge and carry out the Transaction. This includes records and data reviewed in due diligence. It does not cover information that is public through no fault of the receiving party, or information the law requires a party to disclose.

This section supplements any non-disclosure agreement between the parties about the Business. If the two conflict, the non-disclosure agreement controls.

BindingThe seller takes the business off the market for a set time. This one holds.

9. Exclusivity

For 45 days after both parties sign this letter, Seller will not offer the Business, or any part of it, to anyone else, and will not negotiate with or give information to any other possible buyer. Seller will tell Buyer if it receives an unsolicited offer during that time.

BindingEveryone pays their own lawyers and advisors, win or lose.

10. Expenses

Each party pays its own costs of the Transaction, including lawyers, accountants and advisors, whether or not the Transaction closes.

BindingWhich state's law applies. Your lawyer fills this in.

11. Governing law

The binding terms of this letter are governed by the laws of [State].

If these terms work, please sign and return a copy of this letter by [Expiry date].

[Buyer name] (Buyer)Name:                   Title:                   Date:                   
[Seller name] (Seller)Name:                   Title:                   Date:                   

Schedule A: Data Assets

Systems and years are a draft list from the person who built this letter. The definitive agreement will confirm them.

Draft list of Data Assets
SystemYearsRights statusLeft out
[System][Years]Not checked yet[None listed]
[System][Years]Not checked yet[None listed]
[System][Years]Not checked yet[None listed]

Have your lawyer look at this before anyone signs it. They like having something to mark up, and it costs less than starting from a blank page.

Made with the Vaultfish templates. Not legal advice.

A binding clause holds in practice. Your lawyer decides what binds in your deal.

Have your lawyer look at this before anyone signs it. They like having something to mark up, and it costs less than starting from a blank page. Vaultfish helps you run the process. We are not lawyers and this is not legal advice. If you need counsel who knows this area, we can point you to one.

Print, copy and downloads are free, and the .doc with margin notes keeps the tags.

Want the extras?

Get this emailed with the records clause written from your inventory, and a reviewer's note.

Your role (optional)

What this means

  • Margin tags show which clauses usually bind and which are a handshake.
  • Your company records get their own clause, so they do not go unmentioned.
  • Your lawyer reads the letter of intent before anyone signs it.
Talk to a human

What is a letter of intent to buy a business?

A letter of intent, or LOI, is a short letter that sets out the main terms of a sale before the long contract is written. It lets both sides see if they agree on the big points without paying for a full contract first.

Most terms in an LOI are non-binding. That means either side can usually walk away from the price and the timeline. A few clauses usually do bind, and those are the ones that bite: confidentiality, exclusivity, who pays expenses, and which state's law applies.

The builder above tags every clause as binding or non-binding. It also adds a clause most letters skip. Email, chat, CRM and ticket history are records the business holds. Naming them in the letter means somebody decides what happens to them.

A handshake

  • Purpose of this letter
  • Structure
  • Proposed price
  • How the price is paid
  • Due diligence
  • Data assets

A contract

  • Confidentiality
  • Exclusivity
  • Expenses
  • Governing law
Most of the letter is a handshake, and only a few clauses usually hold.

Questions people ask

What is a letter of intent to purchase a business?

A letter of intent is a short letter that sets out the main terms of a sale before the long contract is written. It covers the price, how it is paid, how long the buyer gets to check the business and when to aim to close.

Is a letter of intent legally binding?

Most of it is not. A few clauses usually do bind, such as confidentiality, exclusivity, expenses and governing law. Our LOI builder tags each clause by whether it binds. Your lawyer decides what binds in your deal.

What should a letter of intent include?

The parties, the structure, the price, how it is paid, the time for due diligence, exclusivity, confidentiality and a closing target. Our LOI builder adds a clause for the company's records, which most letters leave out.

What is the difference between an LOI and an asset purchase agreement?

The LOI sets out the main terms. The asset purchase agreement is the full contract that follows due diligence, with the details and the promises each side makes. Your lawyer drafts it from the LOI.

Does the buyer or the seller send a letter of intent?

Usually the buyer. Our LOI builder works from either side, so a seller can draft the terms they would accept and hand them to a buyer to react to.

Why does a letter of intent name data assets?

Email, chat, CRM and ticket history are records the business owns or holds. If a letter of intent never mentions them, nobody decides what happens to them. Vaultfish's LOI builder offers a records clause with a choice of terms, and none of them sets a price.

Related tools

CIM templateThe memo buyers read, with a records exhibit.Fit checkSeven questions about your records. Which buyers may fit.Rights checkCan you license the records you listed?