Understanding the Letter of Intent: The Role of Your Attorney and What to Negotiate

Published on

December 4, 2025

In Wisconsin business law, a Letter of Intent (LOI) is often the first step toward completing a business deal, such as purchasing a company or purchasing real estate. An LOI outlines the key terms both sides agree to discuss before drafting a formal contract.

While an LOI is usually not legally binding, it helps set clear expectations and can prevent misunderstandings later. Working with an experienced Wisconsin business attorney ensures your LOI is carefully drafted, protects your interests, and lays out the groundwork for a smooth transaction. An LOI should always be reviewed by legal counsel before it is signed to avoid costly mistakes in the transaction.

If you’d like assistance in drafting or reviewing an LOI, our business attorneys based in West Bend, Wisconsin, have extensive experience in drafting and negotiating LOIs.

What Is a Letter of Intent?

An Letter of Intent (LOI) is a preliminary agreement that outlines the main points of a proposed business transaction. Think of it as a roadmap for the deal—it helps both parties understand what’s expected before negotiating a detailed contract.

Although most LOIs are non-binding (if properly drafted), some sections, such as confidentiality or exclusivity clauses, may carry legal weight. Because an LOI can influence negotiations and future obligations, it’s important to have a business attorney review or draft it to ensure your interests are fully protected.

Before an LOI is negotiated, the parties will typically enter into a Non-Disclosure Agreement (NDA). An NDA is critical to make sure information shared during discussions is protected.

Why You Should Have an Attorney Draft Your LOI

It might seem simple to create an LOI using a template or ChatGPT, but even small mistakes can cause delays, misunderstandings, or legal disputes. An attorney experienced in Wisconsin business law can:

Review and clarify language to prevent ambiguity or misinterpretation.

Protect your interests and help you secure favorable terms.

Ensure important clauses, like confidentiality, exclusivity, or termination of rights, are included.

Make the LOI thorough and well-organized, making the final contract easier to negotiate and draft.

Having a business attorney involved from the start gives you confidence and leverage, helping you avoid costly errors in the transaction.

Negotiating Checklist: Key Terms to Include in an LOI

A comprehensive LOI should address the following points. Each one helps prevent confusion and protects your position:

Parties to the Agreement – Identify all individuals or entities involved, including subsidiaries or related parties.

Binding vs. Non-Binding Provisions – Clarify which terms are legally binding (e.g., confidentiality and exclusivity) and which are non-binding guidelines.

Price and Payment Structure – Specify total purchase price, payment schedule, deposits, earn-outs, or installments.

Personal Guarantees – State whether individual guarantees are required and outline limits of liability.

Escrows – Detail any funds held in escrow, conditions for release, and dispute resolution procedures.

Collateral for Debt – Identify assets pledged as security for financing and any specific terms of collateralization.

Subordination for Outside Financing – Indicate whether external lenders will have repayment priority.

Exclusive Dealing – Specify any period during which the Seller will be prohibited from negotiations with third parties.

Structure of Transaction – Clarify whether the deal is a stock purchase, asset purchase, or combination, and outline liabilities assumed.

Access to Information; Confidentiality & Non-Disclosure – Define due diligence rights and protections for sensitive information.

Drop-Dead Date for Definitive Agreement – Set a firm deadline for signing the final contract to maintain momentum.

Triple Net Lease – If real property is involved and will be leased by the buyer after closing, specify who pays taxes, insurance, and maintenance.

Contingencies – List of conditions required before closing, such as financing, regulatory approval, or third-party consent.

Transition Assistance – Confirm what transition assistance the owner will be required to provide, whether as a full-time employee for months or years or for a short transition period as a consultant.

Employment Agreements – Outline agreements for key employees, including roles, compensation, and duration.

Non-Competition – Define scope, duration, and geographic limits of any non-compete clauses.

Broker Fees & Professional Expenses – Assign responsibility for brokers, consultants, and professional fees.

Usual and Customary Matters – Include standard representations, warranties, disclosures, and obligations typical in similar transactions.

Conclusion

A well-drafted Letter of Intent is more than a formality. It’s a strategic tool that protects your interests, clarifies expectations, and sets the stage for a successful business deal. Working with a business attorney experienced in Wisconsin business law ensures your LOI is precise, enforceable where needed, and tailored to your goals.

Whether you’re buying, selling, or restructuring a business, having professional guidance on your LOI can save time, prevent disputes, and give you confidence as you move toward a final agreement.

If you need further assistance, please do not hesitate to reach out to this article’s author, Amanda N. Sacks, at amanda@schloemerlaw.com, 262-334-3471, or one of our Business Law Attorneys. Our office is located in West Bend Wisconsin, and we serve businesses in Washington County and throughout the state of Wisconsin.

Originally published: December 4, 2025

Understanding the Letter of Intent: The Role of Your Attorney and What to Negotiate

What Is a Letter of Intent?

Why You Should Have an Attorney Draft Your LOI

Negotiating Checklist: Key Terms to Include in an LOI

Conclusion

More Important Reading