Buyer's Letter of Intent
Buyer/Seller Terms & Conditions
The Letter of Intent is a non-binding document describing the terms and conditions the Buyer and Seller have agreed upon that is the basis for preparing a Purchase Agreement. It contains these elements:
  • Offered purchase price
  • Type of sale, Asset or Stock
  • Non-compete terms
  • Financing terms
  • Equipment list
  • Contingencies
  • Closing date

The fundamentals of the deal are drafted in plain English and spelled out in the Letter of Intent.  

Presentation of the Offer
The Asset Sale & Purchase Agreement
Most transactions are structure as Asset Sales to minimize transaction costs and eliminate the risk of transferring hidden liabilities to the Buyer. Stock sales are more common in middle market transactions to preserve rights that are attached to an existing legal entity. A draft Asset Sale & Purchase Agreement is prepared based on the Letter of Intent, financing contingencies and standard boilerplate clauses. Buyers and Sellers have numerous opportunities to terminating the contract during the Due Diligence Period. The Agreement is presented from the Buyer to the Seller with a deadline for acceptance or counter-offer. A Purchase agreement prepared by the Advisor is often used as the framework for the final documents prepared by attorneys involved in the transaction.
View sample Asset Sale and Purchase Agreement

Counter-Offers & Acceptance
Getting to Yes
The initial offer to purchase may be rejected or counter-offered.  It is usually better not to present an offer than present an offer that is unrealistic. Low-ball offers can impugn the credibility of a Buyer.

Phase IV - Due Diligence - cont.