Letter of Intent Term-Sheet Builder
Answer a short, plain-language interview and watch a letter of intent outline build itself — deal structure, price, exclusivity, and closing conditions — with each section flagged binding or non-binding, ready to bring to a lawyer.
Deal structure
How is the transaction structured?
In an asset purchase, the buyer picks up specific assets and liabilities of the business rather than the corporate entity itself; in a share purchase, the buyer takes over the company's shares — liabilities included. See our asset purchase vs. share purchase guide for the tradeoffs.
Discussion draft — NOT a signable legal document
Letter of Intent
Outline
the Business · August 5, 2026
1.Parties & Deal StructureNon-binding
1.1This letter of intent outline records preliminary terms between the Buyer (the "Buyer") and the Seller (the "Seller") for the proposed purchase of the Business (the "Business").
1.2The proposed transaction is structured as an asset purchase.
2.Purchase Price & Payment StructureNon-binding
2.1The purchase price has not yet been entered — add a figure or range in the interview to complete this section.
2.2The price is proposed to be paid through a combination of:
–a cash payment at closing
2.4The price and payment structure above are proposed terms only. Like the rest of this section, they are not binding on either party and remain subject to due diligence, financing, and the negotiation of a definitive purchase agreement.
3.ExclusivityBinding
3.1For 60 days from the date this letter of intent is signed (the "Exclusivity Period"), the Seller agrees not to solicit, negotiate with, or provide information to any other prospective buyer regarding the sale of the Business.
3.2Unlike most of this letter of intent, this exclusivity provision is intended to be legally binding on the parties from the date of signing — it is one of the few sections a court is likely to enforce even if the deal does not close.
4.ConfidentialityBinding
4.1This letter of intent will itself include a confidentiality clause under which both parties agree to keep the existence and terms of these discussions, and any information exchanged during due diligence, confidential.
4.2Like the exclusivity provision above, this confidentiality obligation is intended to be legally binding, even though most of this letter of intent is not.
5.Due DiligenceNon-binding
5.1The Buyer will have 30 days from the start of document access to complete its due diligence review of the Business, including its financial records, contracts, employees, and operations.
5.2The proposed transaction remains conditional on the results of that review being satisfactory to the Buyer, in its discretion.
6.Key Closing ConditionsNon-binding
6.1Completion of the proposed transaction is conditional on the following, among other conditions to be set out in the definitive purchase agreement:
–the Buyer obtaining financing approval on terms satisfactory to the Buyer
–there being no material adverse change in the Business between the date of this letter and closing
7.Target Closing DateNon-binding
7.1A target closing date has not yet been entered.
7.2This date is a target only and is not binding on either party.
8.Status of This Letter of Intent — What's Binding and What's Not
8.1Except for the exclusivity and confidentiality provisions above, this letter of intent outline is a non-binding expression of intent only. The purchase price, deal structure, payment terms, closing conditions, and target closing date are all subject to due diligence, financing, and the negotiation of a definitive purchase agreement, and do not commit either party to complete the transaction.
8.2In a typical LOI, the provisions most likely to be treated as binding are exclusivity, confidentiality, and — where included — governing law, dispute resolution, and cost allocation. Everything else, including price and the shape of the deal, is usually a signal of direction rather than a promise to close.
8.3A lawyer should prepare the final letter of intent — and the definitive purchase agreement that follows it — based on these terms, stating expressly which provisions are binding and which are not.
Note: This is a discussion draft to guide your negotiation, not a signable legal document or legal advice. LOI terms — especially which provisions are binding — should be reviewed by a lawyer before you send or sign anything. Last reviewed August 1, 2026.
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Is a letter of intent binding? What belongs in one?
An LOI is deliberately hybrid — mostly a non-binding roadmap, with a few provisions meant to hold from the moment it's signed. Here's how the pieces fit together and why each one earns its place.
Binding vs. non-binding
A well-drafted LOI is deliberately hybrid — most of it signals direction only, while a handful of clauses (exclusivity, confidentiality) are meant to be enforceable the moment it's signed. Knowing which is which prevents an accidental contract.
Exclusivity buys you time
An exclusivity (no-shop) period stops the seller from shopping the deal to other buyers while you spend real money on due diligence — usually the single most valuable clause for a buyer.
Confidentiality protects the negotiation
Whether it lives in a separate NDA or inside the LOI itself, a confidentiality clause keeps the existence of the deal and what diligence turns up out of the market.
Price is a placeholder, not a promise
The purchase price and payment structure in an LOI are a starting point for negotiation, not a locked-in number — they can and often do move once due diligence and financing are complete.
Due diligence sets the real terms
The diligence period is where the buyer confirms the numbers, contracts, and risks behind the business. What it finds usually reshapes the price, structure, or conditions before a definitive agreement is signed.
Closing conditions are the deal's outs
Financing approval, landlord consent, key-employee retention — each condition is a door either side can walk through if it isn't satisfied. Naming them early avoids surprises later.
What is a letter of intent (LOI) for buying a business?
A letter of intent is usually the first substantial document signed once a buyer and seller agree in principle to a deal. It records the terms they believe they've reached — price, structure, timeline — in enough detail to guide the lawyers and accountants who draft the definitive purchase agreement. It is a negotiation and alignment tool, not the final contract.
Is a letter of intent binding?
It depends on the clause. Most of an LOI — price, deal structure, payment terms, closing conditions — is a non-binding expression of intent, subject to due diligence, financing, and a definitive agreement. A handful of provisions, most commonly exclusivity and confidentiality, are typically drafted to bind the parties from the moment of signing. This tool labels each section so you can see which is which.
What is an exclusivity clause and why does it matter?
An exclusivity (or 'no-shop') clause is the seller's promise not to solicit or negotiate with other buyers for a defined period. It is one of the few LOI provisions courts are likely to enforce, because it protects the buyer's investment in due diligence from being used to shop a better offer elsewhere.
Can I sign the outline this tool produces?
No. This is a discussion draft meant to guide your negotiation and give your lawyer a running start — it is not formatted or worded as a signable legal document, and it is not legal advice. A lawyer should turn it into a properly drafted letter of intent that states precisely which provisions bind you before anyone signs anything.
Asset purchase or share purchase — which is better?
It depends on tax position, liabilities, and what each side wants to keep or shed. In an asset purchase, the buyer acquires selected assets and liabilities rather than the corporate entity; in a share purchase, the buyer acquires the shares of the company that owns the business, liabilities included. See our asset purchase vs. share purchase guide for the tradeoffs, and confirm the choice with a lawyer and accountant before it's locked into the LOI.
What happens if the deal doesn't close after signing an LOI?
Usually, nothing — because most of the LOI was never a promise to close. Either party can generally walk away from the non-binding terms. But the binding provisions survive: the seller may still owe exclusivity obligations for the stated period, and both sides remain bound by confidentiality, even after talks end.