Successful Acquisitions

BINDING TERMS AND CONFIDENTIALITY

Most of the clauses in the LOI are nonbinding, meaning that there are no penalties for either party if the deal does not go through or the terms are adjusted once due diligence proper is completed. There are some exceptions, however. The LOI always contains a binding element laying out who is responsible for the various expenses of the transaction process itself.

Another important binding element is confidentiality, and detailed attention must be paid to figuring out who can see which documents and with whom the deal can be discussed. A nondisclosure agreement may have been previously signed, but the LOI can reinforce and strengthen confidentiality. Sellers are often concerned that if the buyers are actual or ...