Letter of intent

A letter of intent is issued by the parties to an acquisition, in which the preliminary terms of the deal are stated. This is not a final agreement, since the parties have not yet conducted due diligence, and other actions may need to be taken before the parties sign a final acquisition agreement. Nonetheless, some aspects of a letter of intent can be enforced. For example, it may include a non-disclosure agreement that must be honored by both sides, and it may stipulate that the acquiree cannot use the terms stated in the letter of intent to shop around for a better deal.

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