Deal Terms
Letter of Intent (LOI)
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Quick Answer
A preliminary agreement outlining the key terms of a proposed transaction — similar to a term sheet but more commonly used in M&A contexts.
A Letter of Intent (LOI) is a preliminary, typically non-binding document that outlines the key terms of a proposed acquisition or investment. In M&A, an LOI from an acquirer establishes: proposed acquisition price (or price range), deal structure (asset vs. stock purchase, cash vs. equity consideration), key conditions to closing, exclusivity period, and timeline. LOIs are non-binding on the main deal terms but typically binding on exclusivity and confidentiality. Once an LOI is signed, both parties move into formal due diligence. In venture investing, term sheets serve a similar function to LOIs. The LOI signals serious intent without the full legal commitment of a definitive acquisition agreement.
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.
What Happens When a Startup Gets Acquired: The Full Process
An acquisition feels like a finish line, but it's really a starting gun for a months-long legal and operational marathon. Here's every step of the process, from the first conversation to the day employees find out what their shares are worth.
Startup M&A: What the Acquisition Process Actually Looks Like
Most founders don't learn how startup acquisitions work until they're already in one. Here's a clear, phase-by-phase breakdown of the M&A process — from first contact to closing.
How VC Exits Actually Work: IPO, M&A, and Secondary Sales
From IPOs and M&A to secondaries, here's how VC exits actually work — including cap table mechanics, lock-ups, and what drives real returns for fund managers and LPs.
Comparisons
Frequently Asked Questions
What is Letter of Intent (LOI) in venture capital?
A Letter of Intent (LOI) is a preliminary, typically non-binding document that outlines the key terms of a proposed acquisition or investment. In M&A, an LOI from an acquirer establishes: proposed acquisition price (or price range), deal structure (asset vs. stock purchase, cash vs.
Why is Letter of Intent (LOI) important for startups?
Understanding Letter of Intent (LOI) 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 (LOI) fall under in VC?
Letter of Intent (LOI) falls under the deal-terms category in venture capital. This area covers concepts related to the financial and legal terms that define investment agreements.
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