Writing a Letter of Intent for Starting a Business

What is a Letter of Intent?

A letter of intent (LOI) is a document that outlines an agreement between two or more parties before the agreement is finalized. The LOI is a useful tool for both parties as it serves as a starting point for negotiations and outlines the main points of the agreement. It is often used when negotiating the purchase of a business or when one party is interested in investing in another.

What Should be Included in a Letter of Intent?

When writing a letter of intent, it is important to include the following information:

• The names of both parties involved in the agreement
• A brief description of the business or venture in question
• The proposed terms of the agreement (i.e. the sale price, financing, etc.)
• The timeline for completing the agreement
• The signature of both parties

Tips for Writing a Letter of Intent

When writing a letter of intent, it is important to remember the following tips:

• Be clear and concise: Keep the language simple and avoid legal jargon. Make sure that both parties understand the agreement and their responsibilities.
• Be specific: Be sure to include all relevant details in the LOI, such as the sale price, timeline, and any contingencies.
• Be professional: Make sure that the LOI is written in a professional tone and follows standard business letter formatting.
• Be flexible: Remember that the LOI is not a binding contract and both parties should be open to negotiation.

Example of a Letter of Intent to Start a Business

Below is a sample letter of intent to start a business:

Dear [Name],

This letter serves as a formal letter of intent between [Name] and [Name] for the purpose of establishing a business venture. We propose to create [description of business], with the following terms:

• The initial investment of [amount] by [Name]
• The sale price of [amount] to be paid to [Name] when the business is sold
• The timeline for completing the transaction is [date]

If both parties agree to these terms, we will move forward with negotiations and sign a binding contract. We look forward to doing business together.

Sincerely,

[Name]