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.

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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.

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