Two separate clients asked me for a Letter of Intent (LOI) sample within 48 hours. Other typical questions include: “What should an LOI contain (or not include)?” and “Why use an Memorandum of Understanding or a Term Sheet versus an LOI?”
Capstone looks at an LOI (and all of its derivatives) as a “marketing” document. Especially in the not-for-sale M&A space, the LOI needs to “stand on its own merits”. Meaning, the owner/audience and the direct influencers, need to be able to quickly understand three things:
• Why you are interested in their specific company (e.g., talent, customers, markets, technology, etc.)?
• What is your “vision” for the combined entity (e.g., joint benefits, why stronger together, etc.)?
• What you are offering (beyond simply a price)?
To increase your likelihood of success, include components in your LOIs that clearly outline how you are addressing the owner’s needs, wants, and desires. The owner ‘Hot Buttons’ as we refer to them. If you address them, letting the owners know you heard what they said while positioning your LOI as a stand-alone marketing tool, you will get more YES answers and “sales”.