Glossary - LOI

Used in most major business transactions, a letter of intent (LOI) outlines the terms of a deal and serves as an “agreement to agree” between two parties. An LOI is similar to a term sheet in its content, but differs in structure (one formatted as a letter; the other, as a list of terms).

The real utility of a letter of intent is that it formalizes a preliminary agreement on a topic before negotiations get underway, it outlines what can and can't be talked about outside of that negotiation, and it provides a roadmap that describes how things will proceed.