If the parties have good legislation, it will ensure that there will be clarity between the parties on the terms of the transaction, lead to simplicity when the transaction is concluded, and it will maintain an agreement between the parties and avoid conflicts. In fact, a LOI should be considered as a component of the transaction. The more building blocks the parties have, the more terms have been agreed, the easier it will be to conclude the agreement. I`m sure most of you have seen that LOis are used in AM transactions as a stock and asset market. This is an area that LOIs are most often used, but there are in fact a variety of different scenarios in which LOIs can be beneficial to the parties to consider use. Parties can, for example. B consider the use of a LOI in a capital raising operation. In the case of a capital raising operation, the LOI would be used as an agenda. This card would include the specific terms of the offer, such as the warranty offered. B the subscription price of the warranty, the size of the offer and the completion date. By introducing an agenda, this ensures that all parties, such as investors, the company and all brokers, have all the details about the transaction. You can also use a LOI if you use a service agreement, a co-development agreement, a distribution agreement and, really, in any agreement in which you negotiate the terms that will be negotiated with another party. While a law can be used in a wide range of scenarios, today`s presentation focuses more on AM transactions, as it is a scenario in which LOis are most used.
In addition to the indication of the price and payment terms of the transaction, the LOI also contains items such as the description of the assets to be acquired, any liabilities covered, the terms of the seller`s non-compete obligation agreement, the timing of due diligence and conclusion, a confidentiality provision and an exclusivity clause, commonly referred to as the “non-store clause”. The ACT may also contain some of the most important conditions to be included in the final agreement, for example.B. The restrictions to be provided by the seller in terms of compensation. The LOI is the model used to prepare the final purchase/sale contract.