MPL General Counsel Corner – Trust, but Verify

You figured out what you want and how much it’s worth, now what?  Are you still fearful of the commitment?  A letter of intent (“LOI“) might be a good next step for you to consider in the acquisition/sale process.  However, what goes into an LOI? Typically, the LOI is drafted by the buyer’s counsel and addressed to the seller.  It covers a variety of topics which can include the following:

• Price
• Assets acquired and excluded;
• Liabilities assumed and excluded;
• Items that need further investigation;
• Conditions that need to be met prior to closing; and
• Obligations of both parties after the closing

Importantly, a well written LOI provides for deal process stability and commitment, without the full obligation of a purchase agreement. Lastly, an LOI is generally non-binding.  Still fearful of the commitment?  Maybe some of the articles below can help:

• Do’s and don’ts once a letter of intent is signed – Houston Business Journal (bizjournals.com)
• How To Write A Letter Of Intent (LOI) (forbes.com)
• All Hail Letters of Intent | Inc.com

Essentially the LOI gives you the ability to “trust, but verify” (Ronald Reagan).  As always, your professional business advisors (attorney, accountant, financial advisor, etc.) can certainly be a great place to also ask more questions if you think the LOI is the right fit for your transaction.

Here are a few other things that may be of interest:

• Here is the latest update from August Wealth Advisors (thanks to Howard Greenberg for sharing)

• Helpful Resource Pages
  • Knowledge Center (eisneramper.com)
  • Trout CPA Blog | Tax & Business-Related Topics
  • News & Analysis | Littler Mendelson P.C.
  • Insights, Analysis & Perspectives for Your Business | RKL LLP (rklcpa.com)
  • NFIB Research: Data and Trends Affecting Small Business Owners | NFIB
  • The Tax Warrior Chronicles (taxwarriors.com)

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com) or anyone in our office with questions or comments.  

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.