A preliminary document recording the headline terms on which two parties intend to do a deal, price range, structure, exclusivity, timetable, mostly non-binding by design. Mostly.
Legally, an LOI commits you to little. Behaviourally, it commits you to a price, a counterparty and a timetable, at the moment in the process when you know the least.
Last reviewed 3 July 2026 · Free and ungated
The terms are still indicative; that is the moment to have operators who have negotiated both sides of the table challenge them.
Pressure-test this decisionA letter of intent, in M&A also called heads of terms or a term sheet, sets out the principal terms of a proposed transaction before full negotiation and diligence: indicative price, deal structure, exclusivity, confidentiality, and the intended timetable. Most provisions are expressly non-binding; exclusivity, confidentiality and sometimes break fees usually are binding.
Once an LOI is signed, the indicative price becomes the number the board has heard, advisers are engaged against, and internal sponsors have attached themselves to. Every diligence finding is thereafter negotiated as an adjustment to that anchor rather than weighed as evidence about whether to proceed. Exclusivity compounds this: for its duration the seller talks only to you, and you carry the cost of walking away, in fees, in time, in the awkwardness of explaining a dead deal. The document is non-binding. The momentum it creates is not.