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Business Proposal (Investment) Letter of Intent Template

The business proposal letter of intent is a financial document used by an individual or company to make a basic offer, either binding or non-binding, in investing with Principal Members. The offer will be a monetary contribution towards partial ownership of a business, partnership, or real estate. 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 Letter of Intent?

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 – 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.

Business Proposal Letter of Intent – 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 ____________________

How to Write a Business Proposal Letter of Intent

Download in Adobe PDF, Microsoft Word, or Open Document Text (.odt).

1 – The Investment Letter Template Should Be Downloaded

The letter template on this page can be downloaded to your machine through the links above (“Adobe PDF,” “Microsoft Word,” or “Open Document Text (.odt)”). If you prefer, you can take an opportunity to view preview the letter using the image above and obtain it using the buttons in the caption area.

2 – The Heading Defining Each Party’s Mailing Address Must Be Presented

The Investor information should be documented using the blank lines at the top left-hand corner of this page. This address must be a reliable method of correspondence the Investee may use when contacting the Investor. Thus, enter the official name of the investing entity on the first blank line. If a status suffix (i.e., corp., ltd., etc.) is part of this name, make sure it is included.  Then use the remaining blank spaces will require the Investor’s mailing address. This should be a building number, name of street or road, suite, city, state, zip code. A post office box address may also be used if this it is well-maintained by the Investor. The calendar date attached to this investment letter should be supplied to the blank space labeled “Effective Date.” The next three blank spaces are reserved for presenting the name and mailing address of the Investee. Use the first line here for the name of the Investee and the next two blank lines to document the mailing address of the Investee.

3 – Identify The Status Of This Letter And The Investor

The first statement of this letter will contain the purpose of this letter. The language here will deliver some important information to the Investee but will need some attention from the Investor. If this letter should be considered a binding document, obligating its sender to its contents, then mark the first checkbox in this statement. If the Investor is sending this letter and with no intention of upholding any obligations unless at will then, mark the checkbox labeled “Non-Binding.” Now that we have completed the basic introduction of this letter, it will be time to solidify some facts for the benefit of both parties. We will begin with article “I. The Investor.” Report the full name of the Investor. If this is an entity, it must be reported exactly as it appears on the books. If this is an individual then his or her full name (first, middle, last name) and any applicable title should be reported here.

4 – Discuss The Investment And Detail Each Principal Member

In the second article, “II. Investment,” we must document what the Investor is investing in. Use the blank space to describe the investment. For example, this may be a parcel of land that will be developed. Next, we will record how much money the Investor will put into the investment using the blank line labeled “III. Investment Amount.” This should be a USD dollar amount and may be reported numerically. This will be the full amount of money the Investor intends to surrender to the Investee by the closing date. The Principal Members are the individuals who have control of the current investment. You will need to report the full name of each Principal Member using the blank space in “IV. Principal Members.”  The fifth article “V. The Transaction” will name the ownership interest the Investor will hold and how much money such ownership will cost the Investor. Record the amount that must be surrendered to the Principal Members using the first two blank spaces and the ownership interest the Investor is entitled to on the third blank space.The section “VI. Structure” will not need any attention however, it will present some of the basic conditions that must be met for the proposed investment reach the closing date successfully. This section should be read by both parties. The next article requiring attention, “VII. Financing,” will contain a statement with two checkboxes. You must check one of these boxes to indicate this investment’s status in relation to the Investor’s ability to gain financing for this project. If the investment that is defined above will only occur if the Investor obtains the proper financing, then mark the checkbox labeled “Conditional.” If the Investor plans on going through with this project regardless of whether financing is available, then mark the checkbox labeled “Not Conditional.” The next blank line in this article will only need information if you have indicated this investment will only go through if the Investor obtains financing then, record the terms that shall apply to the financing that must be obtained and this investment on the blank lines after the words “…It Shall Be Under The Following Terms.” If more room is required to fully explain these terms, then you may cite an attachment. If so, make sure the attachment is labeled correctly and presented with this document at the time of signing. The next two articles, “VIII. Access To Information” and “IX. Return Of Materials,” has been included to protect the Investor’s right to privacy and ensure the confidentiality of the Investee should any of the Investor’s trade secrets or private information is protected. These statements will restrict the Investee’s freedom to retain or disseminate the Investor’s private information without the Investor’s explicit permission. The tenth article, titled “X. Investment Conditions,” will require information on the blank line in the first statement. You must enter the number of days the Investor has to review the investment materials then decide upon proceeding with a formal agreement with the Investee upon the blank line between the words “…Into A Formal Agreement Within” and the word “Days…” Obviously, there will be some conditions that the Investor will want to see in place before proceeding with such a commitment. The next three statements will give some basic conditions that apply to most investment situations however, item “D” has been presented with a blank line. If there are any other conditions that should apply to proceed with a formal agreement, then report them on this line or write the word “None.” 

5 – Report On The Closing And Indicate If There’s A Formal Agreement

Article “XI. Closing” will provide a blank line where you may give specifics on how or when the closing should occur. If there is not enough room, then you may continue this report in an attachment, making sure to cite the attachment. You may also write in the word “Pending” or  “None” depending upon the circumstances. This letter will need to cover the circumstances that must be in place for the closing to occur successfully. “XI” will present several checkbox options providing a choice of who will be responsible for the closing costs. You must choose one.  If the Investor sending this letter will assume responsibility for all closing costs, then mark the checkbox “Investor.” Should the Principal Members be obligated to handle all the closing costs, then mark the “Principal Members” box. If both the Investor and the Principal Members will pay for their own closing expenses then, mark the box labeled “Both Parties Bearing Their Own Expenses.” The next section, “XIII. Confidentiality” serves to protect the privacy of both the Investor and the Principal Members. Simply put, any negotiations or information that occurs regarding this investment between these two parties will be treated as confidential according to this article.

6 – Supply Some Additional Information Required For This Paperwork

Article “XIV. Formal Agreement” allows you to quickly define the status of a potential formal agreement. Two checkbox statements are presented here, and you must choose one to provide the requested definition. If a formal agreement will be generated between the Investor and Principal Members, then mark the checkbox corresponding to the statement beginning with “Pending The Satisfaction Of All…” You will also need to enter how many days the Investor may have before entering any such agreement with the Principal Members. If there will be no guarantee that a formal agreement will ever be created regardless of the status of the investment then, select the second statement by marking the checkbox attached to it. The articles titled as “XV. Good Faith Negotiations,” “XVI. Exclusive Opportunity,” and “XVII. Standstill Agreement” provides some assurances to both parties by documenting the intention behind these negotiations. Both parties should make sure to familiarize themselves with this area as well. A formal declaration that the USD will be used to define the amounts of money involved with this document along with the state that holds jurisdiction over this document. This will be handled in articles “XVII. Currency” and “XIX. Governing Law.” You must read these articles then enter the state where this document is governed on the blank space in “XIX. Governing Law.” Articles “XX. Counterparts And Electric Means” and “Severability” will deliver the remaining disclosures that must be made. Finally, deliver a deadline to respond to this letter by entering its calendar date on the blank line after the words “…No Later Than.”

7 – Every Investor And Principal Member Involved Must Sign This Letter

The Investor sending this letter must sign the “Investor’s Signature” line then print his or her name on the blank line below it.  As soon as the Investor has signed this letter, he or she must enter the current calendar date on the blank line labeled “Date.” Every Investor who wishes to be involved with this letter should sign it. You may supply an attachment with the remaining signature, or you may use your editing software to simply add signature areas as required.  Ideally, the Principal Members who will receive this letter as Investees will agree to it, then sign the Principal Member(s) area by the calendar date and return it by the date you reported in the twenty-second article. This can only be considered a formal receipt and acknowledgment of this paperwork if each Principal Member signs and prints his or her name on the “Principal Member’s Signature” and “Print Name” lines respectively. Additionally, each one must report his or her signature date.


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