What is a Letter of Intent to Invest?
A Letter of Intent to Invest is a financial document used by a person or corporation that wants to invest. It is also utilized to make an investment offer to principal members. It can serve as a sign of good faith and can be binding or non-binding, depending on how it is written.
The offer will consist of a monetary commitment toward a portion of ownership in a company, organization, or real estate. It should include the amount of money to be invested, the number of shares, or the percentage of ownership that the investor will have. It includes the investor and the primary members’ options and conditions to satisfy each party's needs.
A Letter of Intent to Invest includes the following:
- Investment — The details of the investment, including the contribution, amount, percentage of ownership, shareholders, and other information about the investment.
- Financing — It specifies whether the Letter of Investment is Conditional or Non-Conditional
- Investment terms — The terms and agreement of the investment. It also includes a certain amount of time to conduct due diligence before closing the deal and communicating with third parties.
- Confidentiality — The parties should agree in the letter that the details of the investment will be kept confidential. They should also agree that any information about the transaction should only be shared with written consent.
- Closing terms — The letter should include a provision for the closing date, which is the day when the investment is paid in full or when the investor receives ownership of a portion of the company's shares.
Where to get a Letter of Intent to Invest template?
If you are an investor, you can create your own Letter of Intent to Invest, providing all the information needed for the completion of the agreement.
Letter of Intent to Invest templates are available online. For your convenience, a Letter of Intent to Invest template that you can electronically fill out is available on PDFRun.
How to fill out a Letter of Intent to Invest template?
Here is a detailed guide on how to fill out a Letter of Intent to Invest:
Enter the name of the sender of the letter.
Enter the address of the sender of the letter.
Enter the effective date of the letter.
Enter the name of the recipient of the letter.
Enter the address of the recipient of the letter.
The Letter of Intent
Mark the appropriate box to determine the type of agreement. You may select:
I. The Investor
Enter the name of the investor
II. The Investment
Enter the type of investment you want to invest in, for example, business or real estate.
III. Investment Amount
Enter the amount of investment that shall be payable on the closing date.
IV. Principal Members
Enter the name of the main shareholders or the owners of the investment.
V. The Transaction
Enter the amount agreed on by the investor and the principal members in numbers and words. Then, enter the percentage of ownership the investor wants to invest in.
This section states that to facilitate a closing, all parties agree to do their best efforts to formulate a formal agreement that:
- Complies with all federal, state, and local regulatory requirements:
- Minimize or eliminate any adverse tax consequences
- Be as cost-effective as possible.
Mark the appropriate box to determine the type of letter of intent depending on their ability to obtain financing. You may select:
VIII. Access to Information
This section states that after the execution of this Letter of Intent, the investor and its advisors will have complete access to all information related to the investment. The investor has a fiduciary obligation to keep the information obtained confidential and agrees not to share it with any third party unless the Principal Members give their written consent.
IX. Return of Materials
This section states that if a formal agreement cannot be made, the investor must return any information obtained through the principal members.
X. Investment Conditions
Enter the number of days given to the investor to enter a formal agreement after receiving and reviewing all necessary materials.
This section also states the conditions of the investments, which includes:
- The review and approval of all materials in the possession and control of the Principal Members;
- The Investor and its advisors have had a reasonable opportunity to perform the searches and due diligence to their satisfaction;
- The Investor being able to communicate with necessary clients, customers, vendors, tenants, or other third (3rd) party necessary.
Enter the date of closing the transaction.
XII. Closing Costs
Mark the appropriate box to determine who is responsible for all costs associated with the closing. You may select:
- Principal Members
- Both parties bearing their own expenses
This section states that all negotiations regarding the investment between the Investor and Principal Members shall be confidential. No press or other public release will be issued to the general public concerning the proposed investment without mutual consent or as required by law, and then only upon prior written notice to the other party unless otherwise not allowed.
XIV. Formal Agreement
Mark the first box if there is a formal agreement created between the parties. Then, enter the number of days an investor shall establish a formal agreement after a pending review of the materials.
Mark the second box if there is no formal agreement created.
XV. Good Faith Negotiations
This section states that the investor and the principal members agree to act honestly and diligently to enter into "good faith" negotiations to execute a formal agreement and close the transaction.
XVI. Exclusive Opportunity
This section states that the parties agree not to negotiate or enter into discussions with any other party unless there are any existing agreements in place.
XVII. Standstill Agreement
This section states that the principal members agree not to sell any portion of the investment.
This section states that all mentions of currency or the usage of the "S" icon shall be known as referring to the US Dollar.
XIX. Governing Law
Enter the state to determine the laws that will be applied to the Letter of Intent.
XX. Counterparts and Electronic Means
This section states that the Letter of Intent may be executed in many counterparts, each of which is considered an original and all of which together comprise the same instrument. Delivery of an executed copy of this Letter of Intent by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Letter of Intent as of the date of successful transmission.
This section states that if any term or phrase in this Letter of Intent is found to be unlawful, the validity, legality, and enforceability of the other sections will not be impacted or hindered in any manner.
Enter the date when the signed and duplicate copy of the Letter of Intent should be returned.
Investor’s Signature Over Printed Name
Print the name of the investor and affix his or her signature over it.
Enter the date it was signed by the investor.
Principal’s Signature Over Printed Name
Print the name of the principal member and affix his or her signature over it.
Enter the date it was signed by the principal member.
Letter of Intent to Invest Reminders
- Provide true and correct information.
- The Letter of Intent shall be read by both parties.
- Make sure that both parties will receive a copy of the Letter of Intent to Invest.
- Make sure to state specific amounts and investments
- Make sure to provide the signature of all parties involved