A reader asks: I’m the founder and CEO of a successful startup and we’ve been trying to sell certain non-core assets (including some IP) to a competitor. Their CEO sent me a letter of intent, which I signed and emailed back to him last week. Now I just received a much better offer from another company and was wondering if I can back out of the first deal. I’ve seen some articles that imply letters of intent are non-binding – so I just wanted to make sure.
Answer: Whether a particular letter of intent (LOI) – sometimes referred to as a “term sheet” or “memorandum of understanding” – is binding or not depends upon the precise language used and the actions of the parties. Many companies typically do not want an LOI to be binding because many of the material terms of the deal have not been negotiated (and they do not want a Court to start filling in those terms in the event of litigation).
To read the full, original article click on this link: M&A: Can you back out when a better deal comes along? | VentureBeat
Author: Scott Edward Walker
