A letter of intent expresses the willingness of parties to do business or enter into a merger. The letter indicates that a merger between companies or an acquisition is being considered seriously and that the parties desire to have further discussions.

The letter of intent helps ensure that the parties are on the same page before they spend the time, effort, and money required to enter into a definitive agreement.

Elements of a Letter of Intent
The letter of intent should address the following:

• Structure. The basic structure of the deal (e.g. purchase of assets or a purchase of stock).
• Price. The amount of money involved.
• Terms of payment. The form of payment along with when it will be paid.
• Main obligations. The responsibilities of each side.
• Closing. Date the parties will try to sign a definitive contract and close the deal and what will happen if a definitive contract is not signed by that date.
• Exclusivity. Whether the negotiations will be exclusive and for what period of time.
• Conditions. The conditions that must occur before a final agreement can be executed.
• Binding or Nonbinding. Whether the letter of intent, or certain provisions of it, legally bind the parties.
• Due Diligence. The terms governing the exchange of information about each other.
• Confidentiality.  Whether either party can discuss the transaction with third parties.