What is the difference between an asset purchase and a stock purchase?

In an asset purchase the buyer acquires chosen assets and only specified liabilities, leaving unknown liabilities behind and getting a stepped-up tax basis — but it often needs third-party consents to assign contracts. In a stock purchase the buyer acquires the equity and the company continues with all its assets and liabilities, which is simpler to transfer but riskier on liabilities. Pick the variant that matches your deal.

How long should the exclusivity period be?

Typically 30–90 days — long enough for the buyer to complete diligence and negotiate the definitive agreement, short enough that the seller is not locked up indefinitely if the deal stalls. Tie its length to your realistic diligence timeline.

Do I need a breakup fee?

It is optional and more common in larger or competitive deals. A breakup fee reimburses the buyer’s costs if the seller walks to a competing bidder during exclusivity. For smaller private deals, exclusivity plus expense allocation is often enough — leave the field as "None" to omit the clause.

Does an acquisition LOI trigger antitrust filing?

It can at the deal level. The Hart-Scott-Rodino Act (15 U.S.C. §18a) requires pre-merger notification to the FTC/DOJ and a waiting period once a transaction exceeds the annually-adjusted size threshold. The LOI itself is not the filing, but if your deal is large, budget for HSR before closing and consult antitrust counsel.

What is the difference between an asset purchase and a stock purchase?

In an asset purchase the buyer acquires chosen assets and only specified liabilities, leaving unknown liabilities behind and getting a stepped-up tax basis — but it often needs third-party consents to assign contracts. In a stock purchase the buyer acquires the equity and the company continues with all its assets and liabilities, which is simpler to transfer but riskier on liabilities. Pick the variant that matches your deal.

How long should the exclusivity period be?

Typically 30–90 days — long enough for the buyer to complete diligence and negotiate the definitive agreement, short enough that the seller is not locked up indefinitely if the deal stalls. Tie its length to your realistic diligence timeline.

Do I need a breakup fee?

It is optional and more common in larger or competitive deals. A breakup fee reimburses the buyer’s costs if the seller walks to a competing bidder during exclusivity. For smaller private deals, exclusivity plus expense allocation is often enough — leave the field as "None" to omit the clause.

Does an acquisition LOI trigger antitrust filing?

It can at the deal level. The Hart-Scott-Rodino Act (15 U.S.C. §18a) requires pre-merger notification to the FTC/DOJ and a waiting period once a transaction exceeds the annually-adjusted size threshold. The LOI itself is not the filing, but if your deal is large, budget for HSR before closing and consult antitrust counsel.

Letter of Intent (LOI) — Business Acquisition

Non-binding LOI for an asset or stock acquisition — buyer, seller, target, price, due-diligence period, exclusivity, breakup fee.

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LETTER OF INTENT

May 23, 2026

Target Founders LLC
200 Startup Blvd, Austin, TX 78701

Re: Proposed acquisition of TargetCo, Inc.

Dear Target Founders LLC:

This letter of intent (this "LOI") sets out the principal terms on which Buyer Holdings, Inc. ("Buyer"), of 100 Acquirer Way, Wilmington, DE 19801, proposes to acquire TargetCo, Inc. (the "Company") from Target Founders LLC ("Seller"). Except for the Sections expressly marked BINDING below, this LOI is non-binding.

1. TRANSACTION STRUCTURE (Non-Binding)
The proposed transaction is a Asset purchase of the Company.

2. PURCHASE PRICE (Non-Binding)
The proposed purchase price is $8,000,000, structured as follows:
$6.5M cash at closing; $1.0M held in escrow for 18 months as security for indemnification; $0.5M earnout tied to retention of the top 10 customers through the first anniversary of closing.

3. DUE DILIGENCE (Non-Binding)
Closing is subject to Buyer’s satisfactory completion of legal, financial, tax, and operational due diligence within 60 days after the date of this LOI. Seller will provide reasonable access to records, personnel, and facilities.

4. EXCLUSIVITY / NO-SHOP (BINDING)
For 45 days from the date of this LOI (the "Exclusivity Period"), Seller and the Company will not solicit, encourage, or enter into discussions regarding any sale, merger, financing, or transfer of the Company or its assets with any party other than Buyer, and will notify Buyer of any such unsolicited approach.

5. CONFIDENTIALITY (BINDING)
Each party will keep confidential the existence and terms of this LOI and all non-public information exchanged in connection with the proposed transaction, and will use it solely to evaluate and negotiate the transaction. This Section survives termination of this LOI.

6. EXPENSES (BINDING)
Each party bears its own costs (legal, accounting, advisory) whether or not the transaction closes.

7. NON-BINDING EFFECT
Except for Sections 4, 5, and 6 (which are BINDING), this LOI is a statement of intent only. It does not create any obligation to negotiate, to complete the transaction, or any other enforceable obligation. A binding obligation will arise only upon a definitive written agreement signed by both parties.

8. EXPIRATION
This LOI will expire if not accepted by ____________.

9. GOVERNING LAW
This LOI is governed by the laws of the State of Delaware.

If the foregoing reflects our mutual understanding, please sign below.

Sincerely,

BUYER HOLDINGS, INC.

By: _____________________________
Name: Buyer Holdings, Inc.
Title: ___________________________

ACCEPTED AND AGREED:

TARGET FOUNDERS LLC

By: _____________________________
Name: Target Founders LLC
Title: ___________________________
Date: ____________________________

About this template

A letter of intent is the moment a deal becomes real — and the moment legal risk first appears. The whole point is to align the buyer and seller on price, structure, and timing before spending heavily on diligence and definitive documents, while staying free to walk away. That freedom depends entirely on getting the binding/non-binding lines right. Texaco v. Pennzoil ($10.5B) is the cautionary tale: a document that looked like a handshake was enforced as a contract. So mark the economic terms (price, structure) explicitly NON-BINDING, and mark the operational protections — exclusivity/no-shop, confidentiality, expense allocation — explicitly BINDING. The structure choice matters too: an asset purchase lets a buyer cherry-pick assets and leave liabilities behind, while a stock purchase takes the company whole, liabilities included. Exclusivity (typically 30–90 days) is what a buyer gets in exchange for funding diligence; a breakup fee is optional and reimburses the buyer if the seller shops the deal anyway.

When to use it

Opening a negotiation to buy a business, before drafting the purchase agreement.
Locking a seller into exclusivity while you run due diligence.
Aligning on price and deal structure (asset vs. stock) early and cheaply.
Giving a lender or board a term sheet to react to before you commit.

What to include

Buyer, seller, and the target company.
Transaction structure (asset vs. stock vs. merger).
Proposed price and how it is structured (cash, escrow, earnout).
Due-diligence period and access.
Exclusivity / no-shop and confidentiality (mark BINDING).
Explicit binding vs. non-binding designation and an expiration date.

Frequently asked

Mostly no, by design — but only if you say so clearly. The economic terms (price, structure) should be marked non-binding, while exclusivity, confidentiality, and expense allocation are usually binding. Courts have enforced LOIs that lacked clear non-binding language (Texaco v. Pennzoil), so the explicit designation in each section is the most important drafting choice.

⚠ Legal disclaimer. This template is provided for informational purposes only and is not a substitute for legal advice from a qualified attorney. Always consult a licensed professional before using this document for any binding agreement.

Jurisdiction: United States — common-law contract formation (Restatement (Second) of Contracts §§17, 21, 27 on intent to be bound and preliminary agreements). A poorly drafted LOI can be enforced as a contract: see Texaco, Inc. v. Pennzoil Co., 729 S.W.2d 768 (Tex. App. 1987) ($10.5B). Antitrust pre-merger notification (Hart-Scott-Rodino Act, 15 U.S.C. §18a) may apply above the annual size-of-transaction threshold; securities laws apply to stock deals.

Last reviewed: 2026-05

Reviewed by ScoutMyTool — consult a licensed attorney for binding use.