Quick take
The LOI is where early conviction turns into a structured deal process.
Glossary term
Letter of Intent (LOI)
A letter of intent, or LOI, is the preliminary deal document that outlines proposed valuation, structure, exclusivity, and major commercial terms before definitive agreements are signed. In M&A, the LOI usually marks the transition from broad target screening into a more formal diligence process.
Why it matters
The LOI sets the pace, scope, and leverage dynamics of the next phase, which is why pre-LOI diligence and issue framing matter before exclusivity begins.
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Sorai Editorial
Reviewed by Sorai’s diligence research and workflow design team.
Financial, tax, legal, and transaction process terminology for investor-facing diligence workflows.
Key points
- Usually covers headline valuation, structure, and exclusivity.
- Often determines how much access the buyer gets during full diligence.
- Creates the bridge between early screening and post-LOI diligence.
- Can shape leverage on price, indemnities, and process timing.
- Does not replace definitive documentation and closing conditions.
Related terms
Related resources
Frequently asked questions
What is an LOI in M&A?
It is a preliminary document that outlines key proposed deal terms before the parties negotiate definitive agreements.
Is an LOI legally binding?
Most LOIs are largely nonbinding, but provisions such as exclusivity, confidentiality, and expense allocation can be binding.
Why does the LOI matter for diligence?
Because the LOI usually triggers exclusivity and sets the stage for deeper financial, tax, and legal diligence.