Letter Of Intent To Sell Business for the United States

Letter Of Intent To Sell Business Template for United States

A Letter of Intent to Sell Business is a preliminary, typically non-binding document used in the United States that outlines the basic terms and conditions under which a business sale transaction would occur. It serves as a framework for future negotiations and typically includes proposed purchase price, payment terms, due diligence requirements, and any exclusivity periods. While generally non-binding except for specific provisions like confidentiality, it demonstrates serious intent to proceed with the transaction.

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What is a Letter Of Intent To Sell Business?

A Letter of Intent to Sell Business is commonly used in the United States as the first formal step in a business sale transaction. This document typically follows initial discussions and precedes the definitive purchase agreement. It serves multiple purposes: documenting preliminary agreement on key terms, providing a framework for due diligence, and demonstrating commitment to the transaction. While most provisions are non-binding, certain elements like confidentiality and exclusivity may be legally enforceable. The LOI helps parties identify potential deal-breakers early and provides a roadmap for attorneys drafting the final agreement.

What sections should be included in a Letter Of Intent To Sell Business?

1. Introduction: Opening paragraph identifying the date and parties involved

2. Transaction Overview: Brief description of the proposed business sale transaction and key assets involved

3. Purchase Price: Proposed purchase price or price range and payment terms

4. Due Diligence: Terms and timeline for the due diligence process, including access to documents and information

5. Confidentiality: Terms regarding the confidential treatment of information exchanged during negotiations

6. Timeline: Proposed timeline for completing due diligence and closing the transaction

7. Binding Terms: Clear statement of which terms are binding and non-binding

What sections are optional to include in a Letter Of Intent To Sell Business?

1. Exclusivity Period: Terms preventing the seller from negotiating with other parties for a specified period

2. Break-up Fee: Terms regarding compensation if either party terminates negotiations

3. Employee Matters: Preliminary agreements regarding treatment of employees post-transaction

4. Regulatory Approvals: Discussion of any required regulatory approvals or filings

5. Non-Compete: Preliminary terms regarding non-competition agreements

What schedules should be included in a Letter Of Intent To Sell Business?

1. Schedule A - Asset List: Preliminary list of key assets included in the proposed sale

2. Schedule B - Financial Summary: Basic financial information about the business

3. Schedule C - Due Diligence Checklist: Initial list of required documents and information for due diligence

4. Schedule D - Key Contracts: List of material contracts that may require assignment or termination

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Document Type

Purchase Agreement

Cost

Free to use
Industries

Securities Acts: Securities Act of 1933 and Securities Exchange Act of 1934 - Must be considered if the sale involves transfer of securities. These acts govern registration, disclosure requirements, and anti-fraud provisions.

Hart-Scott-Rodino Act: Requires parties to large transactions to file pre-merger notifications with the Federal Trade Commission and Department of Justice for antitrust review.

Federal Trade Commission Act: Governs antitrust considerations and prohibits unfair methods of competition and deceptive practices that may affect commerce.

Internal Revenue Code: Federal tax legislation that governs the tax implications of business sales, including capital gains, asset vs. stock sale considerations, and tax liability.

State Corporate Laws: State-specific laws governing corporate entities, their formation, operation, and transfer of ownership.

State Contract Laws: State-specific laws governing contract formation, enforcement, and remedies that apply to business sale agreements.

Blue Sky Laws: State securities laws that regulate the offering and sale of securities to protect investors from fraudulent activities.

Uniform Commercial Code: State-adopted standardized laws governing commercial transactions, including sale of goods and secured transactions.

WARN Act: Worker Adjustment and Retraining Notification Act - Requires employers to provide advance notice of significant layoffs during business sales.

Intellectual Property Laws: Federal and state laws protecting patents, trademarks, copyrights, and trade secrets that may be involved in the business sale.

Environmental Regulations: Federal and state environmental laws that may affect business transfers, particularly for manufacturing or industrial businesses.

Privacy Laws: Federal and state laws governing the protection and transfer of customer and employee data during business sales.

Confidentiality Provisions: Legal requirements and best practices for maintaining confidentiality during the sale process and protecting sensitive business information.

Due Diligence Requirements: Legal framework for the investigation and verification of business assets, liabilities, and operations before sale completion.

Material Adverse Change Provisions: Legal clauses that address significant changes in business conditions that could affect the sale transaction.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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