In mergers and acquisitions, what is the primary function of a Letter of Intent (LOI)?
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Get StartedIn mergers and acquisitions, what is the primary function of a Letter of Intent (LOI)?
Options:
- Outline preliminary terms and often set an exclusivity period before definitive agreements
- Serve as the final legally binding purchase contract
- Provide the mandatory public disclosure filing for the transaction
- Certify tax clearance and regulatory approvals for the buyer
Correct answer: Outline preliminary terms and often set an exclusivity period before definitive agreements
Explanation: An LOI outlines preliminary commercial terms and commonly sets an exclusivity period (often 30–90 days) before parties negotiate definitive M&A agreements; it is usually nonbinding.
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