Letter of Intent — Asset Acquisition
Founder-Friendly / Sell-Side Template
MONTAGUE LAW · M&A FORMS FOR FOUNDERS
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A founder-friendly Letter of Intent for the asset sale of a growth-stage company. Written sell-side — short exclusivity, fiduciary out, no buyer expense reimbursement, and crisp binding/non-binding lines.
What is a Letter of Intent?
A Letter of Intent (“LOI”) is the first written document in most M&A transactions. It summarizes the price, structure, and headline terms of a proposed deal before the parties spend real money negotiating a definitive agreement. Most of it is expressly non-binding. A narrow set of provisions — exclusivity, confidentiality, expenses, and governing law — are binding. Getting that line right is the single most important drafting job in an LOI.
Why Founders Need a Sell-Side Version
Most LOI forms circulating online are drafted pro-buyer: long exclusivity, broad diligence rights, expense reimbursement if the seller walks, and MAC clauses without carve-outs. For a growth-stage founder, signing one of those forms can mean taking your company off the market for ninety days while the buyer runs the clock. The version below inverts those defaults.
Key sell-side protections in this form
- 30-day exclusivity, not 90. Short windows keep pressure on the buyer to move.
- Fiduciary out. If a better unsolicited offer arrives, your board can consider it.
- No expense reimbursement. The pro-buyer “you pay my legal fees if this falls apart” clause is struck entirely.
- Trailing-12-month working capital target. No gaming the adjustment on a single good month.
- MAC carve-outs. General economic, industry, pandemic, and regulatory changes don’t count against you.
- Escrow cap at 10%. Holdbacks stay reasonable.
- Automatic exclusivity lapse if the buyer doesn’t deliver a definitive agreement by the outside date.
How to Use This Form
- Execute a confidentiality agreement with the buyer before providing any non-public information.
- Fill in the deal economics — Purchase Price, cash at close, escrow amount, working capital target.
- Set the exclusivity period (30 days recommended) and the outside/termination date.
- Choose governing law and venue — typically Delaware or the state where the seller is organized.
- Send to your M&A counsel for review before signing. This is a template, not legal advice.
Form: Letter of Intent — Asset Acquisition (Sell-Side)
[SELLER’S LETTERHEAD]
[BUYER]
[BUYER’S ADDRESS]
[DATE]
Re: Proposed Acquisition of [Business]
Dear [Name]:
This letter (the “Letter”) sets forth the principal terms on which [SELLER] (“Seller”) is prepared to discuss the sale to [BUYER] (“Buyer”) of substantially all of the assets of Seller’s [DESCRIBE BUSINESS] business (the “Business”). Except for the provisions expressly identified as binding in Section 14, this Letter is non-binding and creates no obligation to negotiate, sign a definitive agreement, or close any transaction.
1. Proposed Transaction and Purchase Price.
(a) Subject to the conditions described below, at closing Buyer would acquire substantially all of the assets, and assume only those liabilities expressly agreed in the Definitive Agreement, of the Business, free and clear of liens.
(b) The aggregate purchase price (the “Purchase Price”) would be $[AMOUNT] in cash, payable as follows: (i) $[AMOUNT] in cash at closing; and (ii) $[AMOUNT] placed in escrow for [NUMBER] months post-closing solely to secure Seller’s indemnification obligations. The escrow holdback shall not exceed 10% of the Purchase Price.
(c) The Purchase Price assumes normalized working capital of $[AMOUNT], calculated as the trailing twelve-month average in accordance with US GAAP consistently applied.
2. Definitive Agreement. The parties will promptly and in good faith negotiate a definitive asset purchase agreement (the “Definitive Agreement”). The Definitive Agreement will contain representations, warranties, covenants, indemnities, and closing conditions customary for a transaction of this size and type.
3. Conditions to Closing. Closing will be subject only to customary conditions, including completion of confirmatory due diligence, receipt of required regulatory and third-party consents, execution of the Definitive Agreement, accuracy of reps and warranties in all material respects, and no material adverse change — excluding any change arising from general economic, industry, financial market, pandemic, geopolitical, or regulatory conditions that does not disproportionately affect the Business.
4. Due Diligence. Seller will provide Buyer reasonable access to the financial, legal, tax, and operational records of the Business. Access to customers, suppliers, and non-key employees requires Seller’s prior written consent, not to be unreasonably withheld. All diligence is subject to the confidentiality agreement between the parties dated [DATE] (the “NDA”).
5. Employee Matters. Buyer’s hiring plans for Business employees shall be discussed in good faith. Nothing in this Letter commits Seller to deliver any specific employees.
6. Interim Operations. From signing through the earlier of the execution of the Definitive Agreement and the Termination Date, Seller will operate the Business in the ordinary course, consistent with past practice, subject to the fiduciary duties of its board of directors.
7. Exclusivity.
(a) For a period of thirty (30) days from the date of this Letter (the “Exclusivity Period”), Seller will not solicit, initiate, or encourage any competing proposal. Seller may, however, respond to any unsolicited bona fide proposal if its board determines, after consultation with counsel, that failure to do so would be inconsistent with its fiduciary duties (the “Fiduciary Out”).
(b) If Buyer does not deliver a fully-negotiated Definitive Agreement by the end of the Exclusivity Period, this obligation terminates automatically.
(c) Neither party shall be liable for expense reimbursement, break fees, or damages of any kind in connection with termination of this Letter.
8. Termination. This Letter terminates automatically on the earliest of: (i) execution of the Definitive Agreement, (ii) mutual written agreement, and (iii) 5:00 p.m. on [DATE] (the “Termination Date”). Sections 9 through 15 survive termination.
9. Confidentiality. This Letter and its contents are confidential. The parties’ obligations under the NDA continue in full force.
10. Expenses. Each party will bear its own fees and expenses, whether or not the Transaction closes.
11. Public Announcements. Neither party will issue any press release concerning this Letter or the Transaction without the other’s prior written consent, except as required by law.
12. No Third-Party Beneficiaries. This Letter is solely for the benefit of the parties and creates no rights in any other person.
13. Governing Law; Venue. This Letter is governed by the laws of the State of [STATE]. Any dispute shall be resolved exclusively in the state or federal courts located in [COUNTY], [STATE].
14. No Binding Agreement. Except for Sections 7, 9, 10, 11, 13, and this Section 14, this Letter is non-binding and creates no legal obligation. No transaction shall exist unless and until a mutually executed Definitive Agreement is delivered.
15. Miscellaneous. This Letter may be signed in counterparts, including by electronic signature. Headings are for convenience only.
Sincerely,
[SELLER]
By: ________________________________
Name: [NAME]
Title: [TITLE]
Agreed and accepted:
[BUYER]
By: ________________________________
Name: [NAME]
Title: [TITLE]
Disclaimer: This form is provided for educational purposes only and does not constitute legal advice or create an attorney-client relationship. M&A transactions are fact-specific and jurisdiction-specific. Engage qualified counsel before signing any letter of intent or definitive agreement.
