The Importance of a Letter of Intent in M&A Transactions
For most business owners, the sale of their company is the most significant transaction they will undertake. When a serious buyer appears, it is natural to want to move quickly toward a signed definitive agreement and a closing. Experienced sellers and their advisors know, however, that the most consequential document in a deal is rarely the lengthy definitive agreement that comes at the end of the process. It is the short document that comes near the beginning – the Letter of Intent (“LOI”).
Although an LOI is, by design, largely “non-binding”, it can mean the difference between an efficient path to closing and a deal that stalls or falls apart. The terms reflected in a signed LOI will shape, and generally dictate, the definitive agreement that follows. This article addresses LOIs in privately negotiated, U.S. middle-market and lower-middle-market M&A transactions; public-company deals raise distinct issues outside its scope. It is written primarily for sellers and their advisors, although buyers and their advisors will also find it useful in understanding which terms well-advised parties on both sides expect to resolve at the LOI stage.
About the authorPaul H. PincusPartner · New York · php@orllp.legal© 2026 Ortoli | Rosenstadt LLP