Letter of Intent to Do Business Together
All the business deals, including joint venture or business together can take months, sometimes even years, to complete. This one is able to involve a lot of steps and documents. The most important one of the process is where it starts, with the letter of the intent that drives the process through the general understanding up through the end of the deal.
A thing called the letter of intent clarifies the goals of the people involved in the deal. This letter is also known as the memorandum of the agreement or the memorandum of understanding. This one starts and sets out the process toward the final, firm agreement to purchase a business.
Apparently, one or both of the parties can agree to walk away at any point during the process based on the information that is discovered or the lack of agreement on the certain point. The letter of intent itself is like the agreement to move forward toward the possible ending.
Is the letter of intent necessary to do business together? The answer to the question is yes. This one is important for the buyer to make the informed decision for buying the business or entering into the business together. This kind of letter also puts the buyer in the right of the first refusal position. The seller will agree to put the buyer first in the line to purchase the business, even if the other potential buyers should appear.
This thing is able to protect the buter from having to spend a lot of time and money investigating the business only to have the owner sell to someone else at the eleventh hour. From the sight of the seller, the letter of intent can give the seller some assurance that the buyer is serious. This one will allow the seller to review detailed information about the potential financial position of the buyer and the business experience.
When is the letter of intent to do business together created? According to the official website of the Balance Small Business, this letter of intent is created and signed at the certain point in the process of purchasing or selling the business. This one is usually written when two of the parties agree that they want to complete the deal and they are ready for more detailed information to change hands so they are able to start the progressing toward the closing date.
In order to make the well-made letter of intent to do business together, here are some tips that you can follow. The good letter of intent is the one that use the kiss principle. In this case, you have to make it short and simple. You can try to avoid the complicated legal language. Aside from that, you can also keep it general. In addition, you will not want to get too specific at this point. You also do not want to tie up either party multiple and complex details. All that you want is to leave things open for changes and possibilities