How to Write a Letter of Intent

A Letter of Intent is not a legally binding contract, but it indicates that two parties are ready to finalize a deal. Create a Letter of Intent right now.

Both sides should consider establishing a Letter of Intent early in any negotiation process, such as a buyout, merger, lease, or recruiting offer, to lock in exclusive negotiating rights. A Letter of Intent is not a legally binding contract, but it does demonstrate that both parties are prepared to discuss and agree on a final transaction. A Letter of Intent may also be used to successfully demonstrate to investors and creditors that the other firm is interested in finishing the talks.

A Letter of Intent defines the firms’ or individuals’ broad intentions and helps both parties to prepare appropriately. Typically, the letter will include:

Dates specifics
Operations expansion plans
Proposals for operations downsizing
Additional terms of a commercial contract

Each firm or person may then notify its investors and, if necessary, arrange for further finance.