Company Resume: Write the LOI

Verified 20 July 2023 - Legal and Administrative Information Directorate (Prime Minister)

If the various diagnoses you have made give you a positive image of the company, you can write a letter of intent also called LAW (from English) Letter of Intent). It allows you to to define the framework for negotiations and to clearly express your intentions to the transferor in order to reach the conclusion of the final contract.

The letter of intent allows you to expose to the transferor your trade-in requirements and to ask him for a exclusive period.

The letter of intent formalizes the core elements of the recovery package:

  • Identification of the parties : surname and forenames, contact details, domicile
  • Presentation of the company : nature of business, lease details, subsidiaries and equity
  • Terms of Offer : transaction scope, proposed valuation, price payment terms, proposed financing structure, meeting with the transferor.
  • Duration of validity of the offer
  • Length of the period of exclusivity
  • Outcome of open contracts : with customers and suppliers
  • Suspensive conditions : for example, obtaining a loan or an administrative authorization without which you will not be able to conclude the final act
  • Timetable of operations : audit period, negotiation phase, date of signature of the MoU, etc.
  • Confidentiality

Writing the letter of intent is also an opportunity to outline the qualitative elements from the company that motivates you to take over: sales figures, profits, margins, customer characteristics, export percentage, human resources, production equipment, patents, brands, etc.

The letter of intent may also be subject to multiple versions based on your various interactions with the transferor. Under such exchanges, the transferor may countersign documentHowever, this is a firm acceptance of the offer.

It is recommended to be accompanied by a legal professional (lawyer or notary) to draft the letter of intent.

Please note

Bpifrance provides a template for a letter of intent.

While in principle writing a letter of intent is not legally binding, there is a risk: the abusive breakdown of negotiations.

A transferor may ask you for damages if he feels that you have not negotiated in good faithThat is to say that you approached the matter lightly, knowing full well that you would not go through with the operation.

The judge's characterization of the wrongful break will depend on the more or less engaging character Letter of Intent:

  • Content and terms used
  • Status of the relationship between the transferor and you (number of meetings and exchanges for example)

Who can help me?

Find who can answer your questions in your region

  • Public support service for SMEs

    TPE & SME, you have a project, a difficulty, a question of daily life?

    You are called back by THE counselor which can help you within 5 days (average time to care).

    Go to service

  • If you are engaged in a commercial or industrial activity

    Chamber of Commerce and Industry (CCI)

  • If you are engaged in an artisanal activity of production, processing, repair or provision of services

    Chamber of Crafts and Crafts (CMA)