8: Letter of Intent

In this episode of M&A University, expert Jim Evanger breaks down the critical role of the Letter of Intent (LOI) in mergers and acquisitions. He explains the key differences between an LOI and a purchase agreement, detailing the essential components such as financial considerations, purchase price structure, and working capital. The discussion provides valuable insights for business owners looking to understand the initial stages of selling their company, including negotiation strategies, deal structures, and the importance of carefully defining terms before moving to due diligence and closing.

Additional Information

• Topics Covered
  • Introduction to M&A University and Letter of Intent [0:02]
  • Length and Content of LOI and Purchase Agreement [1:34]
  • Process from LOI to Closing [4:07]
  • Information Provided Before LOI Acceptance [7:09]
  • Key Clauses in a Letter of Intent [8:18]
  • Legal Components and Escrow [15:47]
  • Governance of the Letter of Intent [28:15]
  • Seller’s Ongoing Role in the Business [29:34]
  • General Terms in a Letter of Intent [36:14]
  • Negotiating Tips for the Letter of Intent [43:38]
  • Final Advice for Sellers [47:20]
• Helpful Resources
  • Negotiating the Letter of Intent
  • M&A Basics | The Letter of Intent
  • M&A Talk Episode: Top 4 Issues for Sellers to Avoid with an LOI