Letter of Intent (LOI)

An LOI functions as a bidding document and sets out key economic (e.g., bid price) and procedural terms that form he basis for further negotiations in an acquisition process. These provisions are non-binding and seen as a “good faith” representation of a bidder’s intent. PE firms and sellers use LOIs to ensure that there is general alignment on key terms before incurring the expense of in-depth due diligence and negotiating a definitive sale and purchase agreement.