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Letter of intent generator: your acquisition offer, drafted as you go

Describe the deal and the letter of intent is drafted as you type, with the price broken down and the warranties you are asking for. Built for acquisitions of French companies and businesses. Download it in Word and PDF.

Target company
Parties
Sellers and share of the price
70%
30%
Price
Warranties and indemnity (GAP)
Undertakings and timetable
Letter of intent12 articles12 fields to complete

Preamble

DRAFT — prepared on the basis of terms still under negotiation. LETTER OF INTENT — ACQUISITION OF TARGET INDUSTRIES SAS This document is governed by French law. It is drafted in English for convenience; French legal concepts that have no exact English equivalent are given in French in brackets. From: Buyer Holding SAS, [To be completed: legal form, registered office and registration details of the buyer] (the "Buyer") To the attention of: - Founding shareholder, [To be completed: full identity of Founding shareholder], selling 70% of the shares sold - Minority shareholder, [To be completed: full identity of Minority shareholder], selling 30% of the shares sold (together the "Sellers"), Re: Target Industries SAS, a company incorporated under French law in the form of a société par actions simplifiée (SAS), with share capital of €10,000, whose registered office is located in Lyon, [To be completed: registered office address, RCS (Trade and Companies Register) number and legal representative] (the "target company") — contemplated price of €2,400,000. Further to our discussions, we are pleased to confirm our interest in the Transaction described below, on the following terms.

Article 1 — Purpose of the transaction

Buyer Holding SAS (the "Buyer") intends to acquire shares representing 100% of the share capital and voting rights of the target company (the "Transaction").

Article 2 — Price and payment terms

Base price: €2,400,000. This price is payable in the amount of €2,100,000 at closing, and in the amount of €300,000 by way of a loan granted by the Sellers (vendor loan, crédit vendeur), repayable on the following terms: [To be completed: term, repayment schedule, interest rate and security of the vendor loan]. The price has been determined on the basis of the information provided to the Buyer to date and assumes a cash and debt position of the target company consistent with that information; it may be adjusted at closing on the basis of [To be completed: adjustment mechanism (net cash, working capital) or "fixed price with no adjustment"].

Your full document is ready

  • ✓ Full document, ready to review
  • ✓ Editable Word file
  • ✓ PDF ready to share
  • ✓ Fields to complete highlighted
  • ✓ Saved in your workspace
  • ✓ French-law template

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What the letter of intent covers

Purpose of the transaction, price and payment terms (vendor loan, earn-out, adjustment), financing of the acquisition, warranties and indemnity, seller transition support, non-compete, due diligence, conditions precedent, timetable, exclusivity, confidentiality and the binding effect of the letter.

French specifics worth knowing

  • Shares or business assets. You can buy the company's shares (actions in a SAS or SA, parts in a SARL) or only its business (fonds de commerce: customers, lease, brand, equipment). The second route leaves the company's past liabilities with the seller.
  • Garantie d'actif et de passif (GAP) is the French warranty and indemnity package: the seller compensates the buyer for liabilities arising from before closing, within a cap, above a threshold and for a set period.
  • Crédit vendeur is a vendor loan: part of the price is paid later, which eases bank financing and keeps the seller committed to the transition.

Preparing the acquisition

Frequently asked questions

What is a letter of intent for?

A letter of intent (LOI) sets out the buyer's offer before due diligence: price, payment terms, warranties sought, timetable and conditions. It usually opens an exclusivity period during which the seller negotiates with no one else.

Does a letter of intent bind the buyer?

It records an intention and does not oblige the buyer to complete the purchase. Exclusivity and confidentiality, however, bind the parties from signature. The template says so in its final article.

How should the price be presented?

The template separates the amount paid at closing, the part financed by a vendor loan (crédit vendeur) and any earn-out (complément de prix) with its conditions. It also provides for a price adjustment based on the cash and debt found at closing.

Should warranties be addressed in the letter of intent?

It is better to set out the principles of the warranty and indemnity package (garantie d'actif et de passif) in the LOI: cap, de minimis threshold and duration. Agreeing them up front avoids a dispute after due diligence. When the buyer acquires business assets (a fonds de commerce) rather than shares, this guarantee does not apply in that form and the template leaves it out.

Is the document ready to sign?

It is a complete French-law template filled in with your terms. Missing information is highlighted as a field to complete. Have it reviewed by your lawyer before sending it.

Indicative template based on the information entered. It is not legal advice and must be reviewed by a lawyer before it is sent.