BizSugar.com › Finance › Should You Use a Letter of Intent (LOI)? - Exit Promise

Term Sheets or Letters of Intent (LOIs) are commonly used in the buying or selling of businesses. The purpose of LOIs are to state clearly the principal terms that the parties have agreed to as part of the deal and to represent the intent of the parties to pursue the contemplated transaction. Typically, LOIs are non-binding in terms of requiring the parties to close the deal. LOIs are entered into commonly at the beginning of the transaction prior to detailed due diligence and preparation of definitive purchase documents. The framework put into place with the LOI is then used to form the definitive purchase documents needed to close the deal.