Letter of Intent

By Tom Cobery
In August 3, 2016

After the Selling Company narrows the field of potential buyers to one or two, a request for a Non-Binding Letter of Intent (LOI) is made by the Seller. Some Buyers may agree to a Letter of Interest which typically does not have the level of detail that the seller may require to make a decision. The seller should ask for the LOI.

Typically a LOI will spell out, assuming no surprises during due diligence, the Purchase Price and Structure; the Amount and Period of Time of monies to be held in escrow, if any; the Transaction Timing and Due Diligence Requirements; an Exclusivity Period, no further solicitation; and the Confidentiality required by both parties.

Once the LOI is signed by both parties, the due diligence begins and it can be exhaustive. The LOI will become an outline for a Purchase and Sale Agreement to be drafted as Due Diligence is coming to a close. Although the LOI is Non-Binding, both parties should consult with their M & A attorneys, as the foundation of the Purchase and Sale Agreement starts now.

A Seller should be aware that the Buyer, who originated the LOI, will be able to find a way to get out of the potential deal if they so desire, so can the Seller.

If you want to chat, give me a call at 703-837-1095 or e-mail me at tcobery@idealliance.org.

Tom Cobery

Dealing with the day-to-day needs of running a busy printing operation often leaves company leaders little time to plan for the future of their enterprises on their own. Tom works with chief executive officers and senior management executives in the Tag and Label Industry to develop growth opportunities through strategic transactions, new markets, or new service opportunities. Available for consulting on individual projects, he can also be engaged to serve as an Advisory Partner, helping executives guide their company into the future, serving as an impartial sounding board for ideas, and working with them to set the right course for continued growth and greater profitability. Tom’s personal experience as a Tag and Label Industry company president and chief executive officer, plus his extensive networking with other industry executives through his volunteer leadership activities with the Tag and Label Manufacturers Institute (TLMI) give him a unique perspective on the tough issues today’s company leaders face in this specialized segment. Companies engaging Tom will find his insight and independent advice an invaluable asset in helping them achieve their growth and profitability goals. More than a consultant, Tom Cobery wants to be your trusted Advisory Partner.

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