Letter of Intent (LOI)

Letter of Intent or Letter of Intent (LOI).
A very simple and quick definition of a Letter of Intent to Purchase is to describe in detail the “intention” of execution of one corporation over the other. Whether for the purchase negotiation or any other type of operational alliance between the parties.
In International Trade, many say that this is exactly how a pre-contract is made, that is, through a Letter of Intent (LOI); and that the parties negotiate their interests until they reach an agreement, until they reach consensus.
The question we ask you, reader, is as follows:
Will it give you time and condition to reach a consensus once the “intentions” have already been demonstrated?
For this reason, the interested Group or Person who presents the Letter of Intent (LOI) must not forget, as mentioned in the first paragraph, that this document reports the intention in detail.
It turns out that with our years of experience negotiating companies, we have seen that many interested parties who present a Letter of Intent to businesses, present a document punctuating all the interests to sign the purchase intention, and as a guarantee in order to honor the offer, they leave as check deposit 2% to 10% of the amount of interest in the purchase in order to initiate the Due Diligence or Audit process.
If the company is not the one presented in the reports submitted by the Seller or by the company responsible for the intermediation, the Buyer has the right to opt out of the purchase and receives the check left with the company responsible for the intermediation.
If the buyer is a curious or competitor and at some point, without just cause, give up the process, but already in possession of confidential documents, this amount is passed on to the Seller as a fine and the Letter of Intent loses its value for non-compliance with the buyer’s duties.
This letter has the main intention of ensuring both involved in the process, in addition to conducting in a safe and professional manner the entire process of a sale or merger of a company.