Letter of Intent (LoI)

The letter of intent records the central parameters of a possible acquisition: an indicative price or price range, the planned structure (asset deal or share deal), the scope of assets and staff to be taken over, the source of financing, the planned timeline to signing/closing, and often a request for an exclusivity period during further due diligence.

In insolvency practice, the LoI is deliberately non-binding on its core terms — price and conditions — while only individual clauses (confidentiality, cost allocation, sometimes exclusivity) are regularly agreed as binding. It is thus clearly distinct from the later, notarised purchase agreement, which for an asset deal out of insolvency is usually only signed after the creditors' committee has given its consent.

For buyers, a carefully drafted LoI is the key tool for being taken seriously as a bidder: concrete figures instead of vague intentions, a credible proof of financing and a realistic timeline meaningfully improve the odds of advancing to the next round and thereby gaining data-room access.