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Business Proposal (Investment) Letter of Intent

Business Proposal (Investment) Letter of Intent

Updated May 17, 2023

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A business proposal letter of intent (LOI) is a document used to make a basic, binding, or non-binding offer in an investment with principal members. The offer will be a monetary contribution towards partial business ownership, partnership, or real estate ownership. The letter should include the amount being invested and the number of shares or percentage of ownership the investor will have.

A business proposal letter of intent is also referred to as the following:

  • Letter to Invest
  • Letter of Intent for Business

Table of Contents

What is a Business Proposal LOI?

business proposal letter of intent is a document that has the power to act as a sign of good faith when intending to invest, and it can also act as a legally binding contract depending on how the document is constructed. This document gives the investor and the Principal Member(s) a wide range of options and conditions to cater to each party’s needs.

This business proposal letter of intent highlights the following key areas:

  • Investment – Input details about key aspects to the investment and the Principal Members, including the investment idea, investor, investment amount, and the percentage ownership (if any).
  • Financing – Can choose to make this agreement conditional or nonconditional based on the investor’s ability to obtain financing.
  • Confidentiality – The investor has a fiduciary duty to keep information about the investment confidential unless written consent is granted.
  • Investment Conditions – Allows the investor a reasonable amount of time to perform their due diligence and communicate with their clients, partners, and 3rd parties.
  • Electronic Means (eSigning) – Language set herein that allows the document to be sent and signed electronically.

Sample

BUSINESS PROPOSAL LETTER OF INTENT

 

Effective Date: February 20, 2019

RE: Investment into a Business Proposal

This investment letter of intent, (the “Letter of Intent”), represents the basic terms for an agreement that shall be considered binding. After this Letter of Intent has been made a formal agreement may be constructed to the benefit of the Parties involved.

I. The Investor: Albert Cruikshank (the “Investor”).

II. The Investment: Quality Real Estate, Inc. (the “Investment”).

III. Investment Amount: $25,000 (the “Investment Amount”) shall be payable on the closing date.

IV. Principal Members: Sylvia Collins and Donald Martin (the “Principal Members”) are the main shareholders or owners of the Investment.

V. The Transaction: The Investor will enter into an agreement with the Principal Members in the amount of Twenty-Five Thousand Dollars ($25,000) for 10% ownership interest in the Investment.

VI. Structure: In order to facilitate a closing all parties agree to do their best efforts to formulate a formal agreement or Closing that: a. Complies with all federal, state, and local regulatory requirements; b. Minimize or eliminate any adverse tax consequences; and c. Be as cost effective as possible.

VII. Financing: The Investor has made it known that this Letter of Intent is not conditional on their ability to obtain financing.

If this letter is conditional on financing, it shall be under the following terms: Proof of funds presented no later than April 1, 2019.

VIII. Access to Information: After the execution of this Letter of Intent the Investor, and its advisors, shall have full access to any and all information about the Investment. The Investor shall maintain a fiduciary duty to keep the information that it obtains confidential and agrees to not share with any third (3rd) party unless the Principal Members give their written consent.

IX. Return of Materials: Any information that is obtained by the Investor through the Principal Members shall be returned if a formal agreement cannot be reached.

X. Investment Conditions: It shall be the obligation of the Investor to review all materials provided and, subject to the satisfaction of the Investor, enter into a formal agreement within 20 days after receiving all necessary materials.

In addition, the conditions of the investment include: a. The review and approval of all materials in the possession and control of the Principal Members; b. The Investor and its advisors having had a reasonable opportunity to perform the searches and due diligence to their satisfaction; and c. The Investor being able to communicate with necessary clients, customers, vendors, tenants, or other third (3rd) party necessary.

XI. Closing: The closing (the “Closing”) is the act of closing the transaction where the Principal Members exchange the Investment for the Investment Amount. The Closing shall occur: June 1, 2019.

XII. Closing Costs: All costs associated with the Closing shall be the responsibility of the Investor.

XIII. Confidentiality: All negotiations regarding the Investment between the Investor and Principal Members shall be confidential and not to be disclosed with anyone other than respective advisors and internal staff of the parties and necessary third (3rd) parties. No press or other public release will be issued to the general public concerning the proposed Investment without the 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: Pending the satisfaction of all materials by the Investor within 20 days a formal agreement shall be established between the parties.

XV. Good Faith Negotiations: The Investor and the Principal Members agree to act in an honest and diligent manner to enter into “good faith” negotiations in order to execute a formal agreement and/or close the transaction.

XVI. Exclusive Opportunity: Following the execution of this Letter of Intent, the parties agree to not negotiate or enter into discussions with any other party unless there are any existing agreements in place (e.g. option to purchase, first right of refusal, etc.).

XVII. Standstill Agreement: Following the execution of this Letter of Intent, and until the Closing, the Principal Members, agree not to sell any portion of the Investment.

XVIII. Currency: All mentions of currency or the usage of the “$” icon shall be known as referring to the US Dollar.

XIX. Governing Law: This Letter of Intent shall be governed under the laws by the State of Montana.

XX. Counterparts and Electronic Means: This Letter of Intent may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. Delivery to us 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 to us of this Letter of Intent as of the date of successful transmission to us.

XXI. Severability. In case any provision or wording in this Letter of Intent shall be held invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

XXII. Acceptance: If you are agreeable to the aforementioned terms, please sign and return a duplicate copy of this Letter of Intent by no later than February 28, 2019.

INVESTOR

Investor’s Signature ____________________ Date ____________________

Print Name ____________________

PRINCIPAL MEMBER(S)

Principal Member’s Signature ____________________ Date ____________________

Print Name ____________________

Principal Member’s Signature ____________________ Date ____________________

Print Name ____________________