Letter of intent (LOI)
A declaration of intent at the start of a transaction recording the key terms and process, but as a rule not yet binding the parties to conclude the deal.
The letter of intent (LOI), also called a term sheet or memorandum of understanding, documents the basic intention to buy and the key parameters such as structure, indicative purchase price, exclusivity and timetable. It forms the basis for the subsequent due diligence and the negotiation of the share purchase agreement.
Most points are non-binding, yet individual clauses (exclusivity, confidentiality, cost allocation) are deliberately made legally binding. In Austria an LOI can trigger pre-contractual liability (culpa in contrahendo) if negotiations are broken off in bad faith. An accompanying non-disclosure agreement is customary.
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This explanation gives a general overview of Austrian law and does not replace advice in an individual case. The specific circumstances of your transaction are always decisive.
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Non-disclosure agreement (NDA)
A contract obliging the parties to keep confidential the information disclosed during the transaction process.
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Due diligence
The careful examination of the target company before the purchase from a legal, tax, financial and operational perspective.
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Share purchase agreement (SPA)
The central agreement governing the acquisition of a business (share or asset deal), covering the object of sale, purchase price, warranties and completion.
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