A business purchase letter of intent is a document that details a proposed arrangement between a buyer and seller of a commercial entity. It may be considered binding at their discretion, but typically, it provides a framework for a formal agreement to be drafted later.
The document should grant the buyer an inspection period to verify revenue and conduct due diligence during the contingency period. Once binding, the sale must be completed by the deadline, or the buyer risks forfeiting their earnest money deposit.
Ultimately, a Business Purchase Agreement (BPA) is created as a binding contract to finalize the purchase and sale.
Guidelines for Structuring the Letter
Step 1 – Identify the Parties
Begin by providing the complete names and mailing addresses of both the buyer and the seller. If either party is a company, include the business name instead.
Step 2 – Define the Business
Clearly specify the name of the business that is being considered for purchase.
Step 3 – Outline Payment Terms
Include the proposed purchase price along with the due date. If relevant, mention whether a deposit is required or if the buyer will seek financing.
Step 4 – Specify Terms and Conditions
Outline the binding and non-binding clauses included in the agreement. Usually, the buyer has the option to withdraw from the purchase. However, the parties are still required to adhere to confidentiality, deposit, and good faith clauses.
Step 5 – Finalize with Signatures
After providing all the necessary information, both parties should sign and date the letter.
Business Purchase Letter of Intent Sample
