Deal Terms
Letter of Intent
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Quick Answer
A non-binding document outlining the preliminary terms of a deal, commonly used in M&A and some venture transactions.
What it is
A Letter of Intent (LOI) is a document expressing a party's intention to enter into a transaction, outlining key terms and conditions. In M&A, LOIs precede definitive agreements and typically include exclusivity periods during which the target company cannot shop the deal. In venture, term sheets serve a similar function. LOIs are generally non-binding except for specific provisions like confidentiality and exclusivity.
In Practice
An acquirer sends an LOI offering $100M to buy a startup, with a 45-day exclusivity period for due diligence and definitive agreement negotiation. The LOI's financial terms are non-binding.
Operational context
What good looks like
The term is tied to a real workflow, not just a definition.
Ownership, timing, and evidence are clear.
The reader can tell what decision the concept supports.
Related terms point to the next useful explanation.
Why It Matters
LOIs set the framework for deal negotiations and create moral commitments even when legally non-binding. Understanding which provisions are binding (exclusivity, confidentiality) is critical.
VC Beast Take
LOIs in venture are often overlooked compared to term sheets, but they're critical in M&A exits where most venture returns actually materialize. Smart founders negotiate LOI terms carefully because while non-binding, they set psychological anchors for final deal terms. The best M&A attorneys can craft LOIs that provide meaningful protection while maintaining deal momentum — a skill that often determines exit success.
Related tools and reading
Term Family
Related concepts
Further Reading
VC Term Sheet Template & Guide: Every Clause Explained with Examples
A clause-by-clause breakdown of every standard VC term sheet provision — what each term means, what's market, what to negotiate, and the red flags that cost founders millions.
NVCA Model Legal Documents: Every Form a Startup Founder Needs
The NVCA publishes free legal templates that can save you $10-30K in lawyer fees. Here's every document explained in plain English, plus what to watch for.
What Is a Term Sheet? Definition, Format, and Sample Template
A term sheet is the foundational document in any VC deal. Learn the definition, format, key sections, and see a sample template to help you negotiate with confidence.
100+ Venture Capital Acronyms Every Investor and Founder Should Know
From ARR to ZBB, the complete dictionary of VC and startup acronyms with plain-English definitions. Bookmark this — you'll reference it constantly.
The State of Pre-Seed in 2026: Check Sizes, Valuations, and What's Changed
Pre-seed has matured into a distinct asset class. Here's the definitive data on check sizes, valuations, round structures, and what top pre-seed investors are doing differently.
Comparisons
Related Questions
Browse all questions →Frequently Asked Questions
What is Letter of Intent in venture capital?
A Letter of Intent (LOI) is a document expressing a party's intention to enter into a transaction, outlining key terms and conditions. In M&A, LOIs precede definitive agreements and typically include exclusivity periods during which the target company cannot shop the deal.
Why is Letter of Intent important for startups?
Understanding Letter of Intent is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does Letter of Intent fall under in VC?
Letter of Intent falls under the deal-terms category in venture capital. This area covers concepts related to the financial and legal terms that define investment agreements.
Sources & References
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