Is an LOI legally binding?

It depends on wording. Parties may make certain clauses binding (confidentiality, exclusivity) while leaving commercial terms nonbinding; label and structure clearly to reflect intent and consult counsel.

Can an LOI be signed electronically?

Yes. Electronic signatures are enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted; ensure intent, consent, attribution, and retention are satisfied for legal validity.

Who should sign on behalf of an entity?

An authorized officer or other person with express authority should sign. Confirm corporate approvals or member resolutions if required to validate signature authority.

Do I need a notary or witnesses?

Most LOIs do not require notarization or witnesses. Confirm state-specific rules and any downstream closing documents that may require notarization or witness signatures.

How can I revoke an LOI?

Revocation depends on LOI terms and whether binding obligations exist. If nonbinding, a party may typically withdraw before definitive agreements; consult counsel before taking action.

How long should I retain signed LOIs?

Retain LOIs along with closing documents for at least 3 years; retain longer if tax, regulatory, or litigation exposure exists (see IRS guidance and 45 CFR for HIPAA).

Electronic Signature
Templates
Finance
Stock Purchase Letter of Intent

Stock Purchase Letter of Intent

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

STOCK PURCHASE LETTER OF INTENT

Date:

Parties and Target

Buyer Name Buyer Address Seller Name Seller Address Target Company (Issuer) Target Company Address

Transaction Summary

Subject to the terms and conditions set forth herein, Buyer proposes to purchase from Seller class shares, consisting of shares, which represents approximately % of the outstanding equity on a fully diluted basis.

Purchase price per share: $ Total purchase price: $

Deposit and Payment

Deposit (Earnest Money)

Deposit payable to: on or before execution of the definitive purchase agreement. Deposit refundable:

Payment Mechanism / Instructions

Closing

Target closing date: . Closing location: .

Deliverables at Closing

Conditions to Closing

The obligations of Buyer to consummate the transaction are subject to customary closing conditions, including without limitation: (a) completion of due diligence by Buyer to its reasonable satisfaction; (b) execution of a definitive Stock Purchase Agreement and ancillary documents; (c) all necessary corporate approvals of Buyer, Seller and the Company; (d) absence of any injunction, order or law prohibiting the transaction; and (e) receipt of any material third-party or regulatory approvals required to effect the transfer of the shares.

Due Diligence Scope

Representations, Warranties and Indemnities

The definitive Stock Purchase Agreement will contain representations, warranties and customary indemnification provisions for both Buyer and Seller. The parties acknowledge that the statements in this Letter of Intent do not constitute the full extent of representations or warranties but that material misrepresentations made to induce execution of the definitive agreements will be subject to indemnification as negotiated.

Exclusivity and Confidentiality

Upon execution of this Letter of Intent, Seller agrees not to solicit, directly or indirectly, any proposals or offers with respect to the sale of the identified shares or the Company for a period of days. All non-public information exchanged between the parties in connection with the transaction shall remain confidential in accordance with the confidentiality obligations set forth below and any existing confidentiality agreement between the parties.

Confidentiality Term

Expenses and Break Fees

Each party shall bear its own expenses in connection with the negotiation and documentation of the transaction, except as otherwise set forth in the definitive agreements. If applicable, any breakup fee or reverse termination fee will be specified in the definitive Stock Purchase Agreement.

Governing Law and Dispute Resolution

This Letter of Intent shall be governed by and construed in accordance with the laws of the State of without regard to conflicts of law principles. Any disputes arising out of the binding provisions of this Letter of Intent shall be resolved in the state or federal courts located in that state.

Binding and Non-Binding Provisions

Except for the provisions regarding Confidentiality, Exclusivity, Expenses and Governing Law (the "Binding Provisions"), this Letter of Intent is intended only as a summary of terms for negotiation and is non-binding. The parties acknowledge that no definitive obligation to consummate the transaction shall arise unless and until a mutually acceptable Stock Purchase Agreement and related documents are executed and delivered by all parties.

Notices

Buyer Notice Contact Seller Notice Contact

Additional Terms

Other Terms / Special Conditions

This Letter of Intent expresses the principal terms of the proposed transaction and will serve as the basis for preparation of a definitive Stock Purchase Agreement. The parties intend to negotiate in good faith to finalize the transaction as described herein.

Buyer Printed Name:

By:

Date:

Seller Printed Name:

By:

Date:

What a Stock Purchase Letter of Intent Is and when it’s used

A Stock Purchase Letter of Intent (LOI) is a preliminary written agreement that outlines the principal terms under which a buyer proposes to purchase equity from a seller. The LOI typically summarizes parties, number and class of shares, proposed purchase price, key conditions to closing (due diligence, regulatory approvals, financing), exclusivity periods, and a target closing window. It may be binding or nonbinding on select terms; detailed definitive agreements follow. The LOI helps align expectations and structure the negotiation and due diligence that lead to a stock purchase agreement.

Why a clear LOI matters for stock transactions

A concise Stock Purchase LOI reduces ambiguity during negotiations, sets the scope of due diligence, and documents key commercial terms that guide drafting of definitive agreements while preserving parties’ ability to continue or exit negotiations.

Who typically prepares and reviews a Stock Purchase LOI

Several parties commonly draft, review, or sign an LOI depending on the deal structure and size.

Buyers — corporate development, private equity, or individual purchasers who set purchase terms and conditions.
Sellers — company founders, management, or boards that review price, restrictions, and post-closing covenants.
Advisors — corporate counsel, investment bankers, and accountants advising on terms and regulatory or tax implications.

In many deals legal counsel drafts the LOI language to balance commercial clarity with limited binding commitments, protecting parties pending definitive agreement execution.

Six core sections to include in a professional LOI

A well-structured LOI covers defined topics so negotiators and counsel can quickly confirm critical deal mechanics and move toward definitive documents.

Parties

Identify buyer and seller legal names, entity types, and addresses. Use the exact legal entity designation (e.g., 'ABC Holdings, Inc.') to avoid later identity disputes and for accurate corporate approvals.

Shares & Amount

Describe the class, number, and percentage of outstanding shares to be purchased and whether the transaction includes newly issued or treasury shares; specify whether the purchase transfers voting or economic rights.

Purchase Price

State the total consideration and per-share price, currency, payment method, escrow arrangements, and any price adjustments such as working capital or net debt true-ups.

Conditions

List closing conditions: satisfactory due diligence, board approvals, third-party consents, financing, and regulatory clearances necessary to proceed to a binding stock purchase agreement.

Exclusivity / Timeline

Specify any exclusivity/no-shop period, the target closing date or window, and deadlines for deliverables such as disclosure schedules and financing commitments.

Confidentiality & Legal Effect

Clarify which provisions are binding (e.g., confidentiality, exclusivity) and which are nonbinding; capture governing law and any dispute-resolution preferences.

Step-by-step: completing and circulating the LOI

Follow these sequential steps to prepare, approve, and share a Stock Purchase LOI with all parties involved.

01

Draft key terms: Summarize price, shares, and conditions.
02

Legal review: Counsel confirms language and binding intent.
03

Obtain approvals: Secure board or member sign-off if required.
04

Distribute LOI: Send to counterparties and advisors for signature.

Where the LOI fits in the transaction workflow

The LOI sits between initial term negotiation and the definitive Stock Purchase Agreement; it coordinates diligence and scheduling for the closing.

Initial Terms: Documented in LOI for negotiation.
Due Diligence: Buyer conducts legal and financial review.
Definitive Agreement: Drafted after LOI alignment.
Closing: Deliverables exchanged and funds transferred.

Typical digital workflow settings for an LOI

Configure the document workflow to control access, authentication, and routing for signatures and post-signature distribution.

Field	Configuration
Signer Order	Sequential or parallel routing as required
Authentication	Email link, SMS code, or stronger methods
Reminders	Automated email reminders at set intervals
Final Copies	Auto-send signed PDF with audit trail

Digital signing considerations for an LOI

Ensure your chosen e-signature platform supports legal compliance, audit trails, and the authentication level your transaction requires.

Audit Trail: Captures IP, timestamps, and actions
Authentication: Email/SMS/KBA or stronger methods
Document Formats: PDF, DOCX compatibility expected

Verify integrations with your storage or ERP systems and check for necessary compliance features such as HIPAA BAA or 21 CFR Part 11 if your transaction touches regulated data.

Common LOI deadlines and timing expectations

LOIs typically include discrete deadlines for responses, exclusivity, diligence, and closing; align dates to your financing and regulatory calendar.

Response Window:

Buyer or seller response deadline, often 5–14 business days

Due Diligence Period:

Commonly 30–60 days depending on scope

Exclusivity Term:

Typical 30–90 days to negotiate definitive agreements

Target Closing Date:

Set as MM/DD/YYYY in the LOI

Termination Rights:

Deadlines for terminating if conditions not met

Key milestones from LOI to closing

Track these numbered milestones to monitor progress and trigger required actions between parties.

01

Execute LOI

Parties sign the LOI and confirm binding items

02

Complete Due Diligence

Buyer finishes document and operational review

03

Negotiate Definitive Documents

Draft and exchange stock purchase agreement

04

Closing

Satisfy conditions, transfer shares and funds

Common mistakes to avoid when preparing an LOI

Unclear binding language that unintentionally creates enforceable obligations before the definitive agreement is signed.
Vague price adjustment formulas or undefined reference dates for working capital and net debt true-ups.
Failing to specify the exact legal entity names and signature authority for each signing party.
Omitting necessary regulatory or shareholder approvals, which can delay closing or render the LOI misleading.

Risks and potential consequences of errors in an LOI

Unintended Binding Terms: Can create enforceable obligations

Delay Costs: Extended diligence or financing failures

Regulatory Risk: Securities or antitrust review implications

Tax Exposure: Incorrect allocations or withholding

Reputational Harm: Public disputes or leaked terms

Enforcement Costs: Litigation and advisory expenses

Security and compliance considerations for signed LOIs

Encryption: TLS 1.2/1.3 in transit; AES-256 at rest

Audit Trail: Detailed timestamps and signer attribution

Regulatory: ESIGN (15 U.S.C. ch. 96) and UETA compliance

HIPAA: BAA required for PHI involvement

Certifications: SOC 2 Type II and ISO 27001 available

Retention: Preserve signed record for reproducibility

Sample eSignature vendor comparison for signing LOIs (signNow listed first)

Basic pricing and capability comparisons can help choose a platform for executing LOIs; verify plan details with each vendor before purchase.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by vendor	Varies by vendor	Varies by vendor	Varies by vendor
Bulk Send	Yes (Business Premium)	Yes	Yes	Yes	Varies
Audit Trail	Yes	Yes	Yes	Yes	Yes
Envelope Cap	No cap	100 envelopes/user/year	Varies	Varies	Varies

FAQs: Practical answers for Stock Purchase LOIs

Answers to common questions about binding effect, e-signing, signatures, revocation, and recordkeeping for LOIs.

Need help? Contact support

Is an LOI legally binding?
It depends on wording. Parties may make certain clauses binding (confidentiality, exclusivity) while leaving commercial terms nonbinding; label and structure clearly to reflect intent and consult counsel.
Can an LOI be signed electronically?
Yes. Electronic signatures are enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted; ensure intent, consent, attribution, and retention are satisfied for legal validity.
Who should sign on behalf of an entity?
An authorized officer or other person with express authority should sign. Confirm corporate approvals or member resolutions if required to validate signature authority.
Do I need a notary or witnesses?
Most LOIs do not require notarization or witnesses. Confirm state-specific rules and any downstream closing documents that may require notarization or witness signatures.
How can I revoke an LOI?
Revocation depends on LOI terms and whether binding obligations exist. If nonbinding, a party may typically withdraw before definitive agreements; consult counsel before taking action.
How long should I retain signed LOIs?
Retain LOIs along with closing documents for at least 3 years; retain longer if tax, regulatory, or litigation exposure exists (see IRS guidance and 45 CFR for HIPAA).

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