Whether you are the buyer or seller in a merger or acquisition, Letters of Intent are a crucial first step to achieving a satisfactory outcome. Discuss Letters of Intent in Georgia with a Skilled Attorney A diligent attorney can help draft an effective LOI to protect the information of your Georgia business. As such, sellers should be adamant about requiring a confidentiality clause in any Letter of Intent. Much of what a seller shares with a prospective buyer is sensitive information, and it may harm the company if their proprietary facts are too widely known. Our experienced lawyers in the area can help ensure that the timeframe in your Letter of Intent is beneficial for your goals in closing the deal. Companies anxious to sell may lobby for a shorter timeframe because they cannot talk to other buyers if bound by an LOI. This timeframe is often the same length as the lock-up period, usually from thirty to 120 days. The Letter of Intent also specifies a period to complete due diligence.
LETTER OF INTENT CODE
Uniform Commercial Code liens on the company’s assets.Books and records of each company, including shareholder information, existing contracts, and accounting reports.Detailed questionnaires for the other party’s management.Other elements that might be included in due diligence are: This period of time allows for exploration of the management teams’ successes and failures, the growth in market share, the success of current product offerings, and plans for future development. Due Diligenceĭue diligence is a chance for buyers and sellers to evaluate the other party’s suitability as a merger or acquisition candidate. The seller also gains peace of mind that the buyer is not on the lookout for a more lucrative deal. This protects a buyer who might be at risk if a seller attempts to shop the deal, hoping for a higher bidder. Lock-Up PeriodĪ lock-up period binds the parties to only negotiate with each other. Although the LOI does not bind the parties to go through with the sale, it does contain provisions the parties agree to adhere to, including a tentative price and payment terms, a lock-up period during which due diligence is performed, a closing date, and a promise not to divulge confidential information. This document is exploratory and gives the parties time to research the potential benefits and operations of the post-transaction company. What is Contained in a Letter of Intent?Ī Letter of Intent precedes a binding definitive agreement. A skilled attorney at our Georgia law firm can review or draft Letters of Intent to kick off a successful merger or acquisition. The acquired company can operate as a subsidiary of the parent or be absorbed into the acquiring company. AcquisitionsĪ friendly acquisition occurs when one company buys another company that wishes to be sold.
Management in the combined company is negotiated, but generally, both companies benefit in boosting their market share. When two companies merge, shareholders from both companies own the new entity.
Alternatively, a deal can be structured as a merger, which also involves a Letter of Intent. This lets the seller know that the buyer is serious. The Letter of Intent is usually presented to the seller by the buyer in an acquisition. Letters of Intent for Mergers and Acquisitions At Sparks Law, our skilled attorneys can help you draft this crucial document in the business negotiation process.
However, if that collaboration and synergy is established, you should contact a lawyer who focuses on Letters of Intent in Georgia. Once a merger or acquisition candidate has been identified, the parties engage in talks to see if a definitive deal is feasible. If you are selling or buying a business, the Letter of Intent signals that both parties are committed to negotiating a final deal. A Letter of Intent (LOI) can serve various purposes, depending on the circumstances.
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