Use the outline with your transaction facts
This outline helps you prepare for drafting and review. It does not establish the appropriate terms for your transaction. Have counsel reconcile the commercial decisions, intended binding provisions and governing law before it is sent for signature.
Download the editable LOI outline (TXT) · Read the drafting and negotiation guide · Browse the LOI library
Decisions to settle before filling the blanks
| Topic | What to record | Question for the deal team |
|---|---|---|
| Buyer and seller | Match the proposed parties to the entity and ownership records. | Who owns the assets, and can the proposed signatory commit that owner? |
| Price and payment | Separate cash, debt, contingent payments and equity. | What conditions, priority rights or later adjustments affect each component? |
| Asset or equity purchase | Identify what changes hands and what is excluded. | Which contracts, permits, liabilities and approvals require separate analysis? |
| Diligence and financing | Name records, advisers and milestones. | What happens if information, financing or consents are delayed? |
| Exclusivity and confidentiality | Identify the provisions intended to create obligations. | What are the actual deadlines, exceptions and consequences? |
Illustrative LOI outline
BUSINESS ACQUISITION LOI: ILLUSTRATIVE DISCUSSION OUTLINE For preparation with counsel. Not a completed agreement or recommendation to sign. Date: [date] Proposed buyer: [legal name; formation status; any proposed acquisition affiliate] Proposed seller: [legal owner of the assets or equity; authorized signatory] Target business: [name and description] 1. PROPOSED TRANSACTION [Identify an asset purchase or equity purchase; specify included assets or interests and exclusions.] 2. PRICE AND PAYMENT [State proposed price, cash at closing, seller debt, contingent consideration and any rollover. Identify assumptions and unresolved adjustments.] 3. WORKING CAPITAL AND OTHER ADJUSTMENTS [Identify the proposed mechanism, what remains to be agreed and who will supply financial information. Do not count the same debt or asset twice.] 4. DILIGENCE [Specify access, categories of records, permitted advisers, expected milestones and unresolved scope.] 5. FINANCING AND APPROVALS [Identify proposed funding, lender review, investor approvals, regulatory approvals and third-party consents.] 6. PROPOSED CLOSING CONDITIONS [Describe conditions to negotiate in definitive documents; do not assume this outline supplies termination rights.] 7. EXCLUSIVITY [Counsel to draft scope, parties bound, start/end, milestones, extensions and remedies.] 8. CONFIDENTIALITY [Identify the existing NDA and reconcile its parties, permitted disclosures, term and surviving obligations.] 9. EXPENSES AND TERMINATION [Counsel to address costs, any reimbursement, termination rights and surviving obligations.] 10. BINDING STATUS AND GOVERNING LAW [Counsel to identify exactly which provisions are intended to bind, which are not, and the effect of execution under applicable law.] 11. EXPIRATION AND EXECUTION [Identify the response deadline, correct signatories and documents requiring approval before signature.] Unresolved decisions: [issue / responsible person / information required / next step]
How the choices change the draft
Cash price versus a payment package
A fictional buyer proposes $1,000,000: $800,000 at closing and a $200,000 seller note. The note amount is not another payment at closing. Its obligor, security, repayment and lender restrictions still need agreement. If the parties instead propose an earnout, the performance test and payment conditions require different drafting. See earnout versus seller note.
Asset purchase versus an equity purchase
For an asset purchase, identify the assets and obligations included and the transfer work each may require. For an equity purchase, identify the interests being transferred and investigate the entity's existing obligations and change-of-control provisions. Neither label alone resolves every liability or consent question. Use the asset-versus-stock comparison with your advisers.
Exclusivity with a workplan
Specify when the period begins, the conduct restricted, the information the buyer needs, progress milestones, and how an extension would be agreed. Do not copy a duration without checking the target, financing and approvals. See no-shop and exclusivity clauses.
Binding status needs a deliberate choice
A heading that says “non-binding” is not a substitute for reviewing the entire document. Identify the provisions intended to bind, reconcile them with the NDA and other agreements, and ask counsel about applicable law. Avoid signing an incomplete outline or assuming a template creates a right to walk away.
Move from the outline to reviewed terms
- Collect the proposed terms, existing NDA, entity names, financing summary and next deadline.
- Mark unresolved terms instead of filling them with market assumptions.
- Ask counsel to review intended obligations, authority, document consistency and negotiation priorities.
- After signing, assign the diligence, financing and drafting workstreams.
Your LOI should also specify what happens if due diligence reveals material issues. See the diligence process and workstream guide, use the national checklist to organize requests, and follow the first 48 hours after signing. For help with an actual draft, see LOI review services.
Questions before the next step
Is this a completed agreement?
No. It is an educational outline for discussion with counsel. The transaction facts, intended binding provisions and governing law must be addressed before signing.
Can the same outline cover asset and equity purchases?
It can help organize questions for either structure, but the definitive language, diligence and transfer requirements differ. Identify the proposed structure and obtain transaction-specific review.