# LOI Guidelines

Canonical: https://tuckadvisors.com/loi-guidelines

Last updated: 2025-12-16

## Overview

These guidelines cover the essential elements to include in a Letter of Intent (LOI) when engaging in a transaction. They serve as a reference for parties involved in negotiations to ensure clarity and comprehensiveness in their proposals.

## Definitions

- **Price**: Cash, stock, and any earnout provisions (if applicable).
- **Structure**: Stock or asset purchase.
- **Indemnity Caps**: Limits on indemnity obligations.
- **Indemnity Terms**: Specifies who will provide indemnity (e.g., stockholder, major stockholders, Seller) and whether obligations will be joint and several.
- **Survival Period**: Duration for which representations and warranties remain effective, including categorization of fundamental vs. non-fundamental representations.
- **Escrow Amount**: Any amount held in escrow, including the time period.
- **Working Capital Framework**: Framework for working capital adjustments and mechanics.
- **Terms of Employment**: Conditions for management employment (if any).
- **Restrictive Covenants**: Any restrictions placed on management (if any).
- **Venue and State**: Location for conflict resolution.
- **Internal Process**: Steps required to approve the transaction.
- **Due Diligence Timeline**: Estimated start and end dates for due diligence.
- **Drafting Timeline**: Estimated date for the first draft of the purchase agreement.
- **Closing Date**: Estimated date for the transaction's closing.

## Process/Timeline

1. **Evaluate Offer**: Address the following in your LOI:
   - Structure
   - Process
   - Additional information that helps frame your LOI.

2. **Due Diligence**: 
   - Estimated start date and end date for due diligence.
   - Estimated date of first draft of purchase agreement.
   - Estimated closing date for the transaction.

## Context for usage

These guidelines are referenced when drafting a Letter of Intent to ensure that all critical components are included, facilitating smoother negotiations and clearer expectations between parties involved in a transaction.