Letter of Intent (LOI)

A Letter of Intent (LOI), also known as a Memorandum of Understanding (MOU) or Heads of Terms, is a pre-contractual document formalising the key terms of a proposed transaction — indicative price, structure, main conditions, timeline — without creating a binding commitment to complete the deal. It marks the transition from indicative offers to full due diligence. It typically contains binding clauses (exclusivity, confidentiality, break-up fee) and non-binding clauses (price, structure). Its precise drafting is critical: binding provisions genuinely commit the parties, while non-binding provisions form the negotiating basis for the SPA.

‍

Example: following a competitive sale process, the preferred buyer submits an LOI offering CHF 28.0 million enterprise value using a locked-box mechanism, subject to satisfactory due diligence. Binding provisions include 6-week exclusivity and enhanced confidentiality. Price and structure remain non-binding until SPA execution — creating negotiating room while protecting the buyer's process investment.

‍

Hectelion drafts and negotiates Letters of Intent to secure key transaction terms before the due diligence phase, protecting our clients' interests throughout the process.