Setting the Terms That Shape the Entire Deal
A letter of intent might be non-binding — but the terms you agree to in an LOI have a way of becoming very real, very quickly. Once a buyer and seller shake hands on headline terms, renegotiating those numbers in the definitive agreement becomes an uphill battle. That’s why John Montague considers the LOI phase one of the most critical moments in any M&A transaction. With more than fifteen years of experience advising technology companies on mergers, acquisitions, and corporate transactions — including time at Locke Lord LLP (now Troutman Pepper Locke), where he focused on M&A and private equity — John helps clients get the LOI right the first time.
Tip from John Montague: People think of LOIs as non-binding, and technically most provisions are. But the exclusivity clause, the confidentiality provisions, and the deal timeline are usually binding — and they can lock you into a process that’s hard to exit if the terms aren’t right. Treat the LOI like it matters, because it does.
How We Help
John Montague’s LOI and term sheet practice covers the full spectrum of pre-definitive agreement work in M&A transactions. This includes drafting letters of intent and term sheets that accurately reflect the client’s negotiating position while preserving flexibility for the definitive agreement phase; reviewing and redlining LOIs presented by counterparties, identifying provisions that could create unintended obligations; negotiating exclusivity periods, break-up fees, and no-shop clauses; structuring non-binding terms to create favorable precedent for the purchase agreement; advising on which provisions should be binding versus non-binding; and coordinating LOI terms with the client’s broader deal strategy, including tax structuring and financing contingencies.
The Art of the Non-Binding Agreement
There’s a paradox at the heart of every letter of intent: it’s called “non-binding,” but it sets the trajectory of the entire transaction. The purchase price, the deal structure (asset vs. stock), the treatment of employees, the escrow terms — once these are memorialized in an LOI, they become the baseline from which all future negotiations proceed. Deviating from LOI terms during the definitive agreement phase creates friction, erodes trust, and can kill deals.
This is why John Montague approaches LOI drafting with the same rigor he brings to definitive agreements. Every term, even a non-binding one, should be deliberate. His accounting background from Stetson University gives him a particular edge in structuring the financial terms — purchase price adjustments, working capital mechanisms, and earnout frameworks — that often determine the real economics of the deal.
For technology company transactions, the LOI phase also requires careful attention to intellectual property treatment, employee retention arrangements, and technology integration timelines. These are the terms that technology founders care most about but that generic LOI templates often overlook. John’s deep experience in technology transactions ensures these founder-critical terms are addressed from the outset.
Frequently Asked Questions
Is a letter of intent legally binding?
Most LOI provisions are non-binding — meaning they express the parties’ intentions but don’t create enforceable obligations. However, certain provisions are typically binding, including confidentiality obligations, exclusivity (no-shop) clauses, and provisions governing who pays transaction expenses. John Montague drafts LOIs that clearly distinguish between binding and non-binding provisions to avoid ambiguity.
What should be included in an M&A term sheet?
A well-drafted term sheet should cover purchase price and payment structure, deal type (asset vs. stock), key closing conditions, representations and warranties scope, indemnification framework, exclusivity period, anticipated timeline, and any material conditions specific to the transaction. For tech deals, it should also address IP ownership confirmation, key employee retention, and technology transition planning.
When should I involve a lawyer in the LOI process?
Before you sign anything — and ideally before you begin substantive negotiations. John Montague frequently advises clients who received an LOI from a buyer and signed it without legal review, only to discover they’ve agreed to unfavorable exclusivity terms or a deal structure that creates unnecessary tax exposure. Early legal involvement preserves optionality.
About John Montague
John Montague is a venture capital, M&A, and technology transactions attorney who has counseled clients on deal structuring and negotiation for over fifteen years. A graduate of the University of Florida Levin College of Law with an accounting degree from Stetson University, John combines legal and financial fluency in his transactional practice. He serves clients from Montague Law’s offices in Fernandina Beach and Coral Gables, Florida.
Related Practice Areas: Mergers & Acquisitions | Buy-Side M&A Advisory | Sell-Side M&A Advisory
Need help with an LOI or term sheet? Call 904-234-5653 or schedule a consultation.