How to Write a Captivating Letter of Interest For Business

One of the many secrets that prosperous entrepreneurs have for their success is their constant lookout for business opportunities.

When good opportunities such as joint projects, project collaborations, business deals, or other fortunate opportunities present themselves, they investigate them immediately.

In these situations, you must prepare a letter of interest. It serves as a proposed project, professional application, or formal request to enter into a contract with another private corporation, whether small or large.

In this article, we describe what a letter of interest for business is, why it is important and how to draft it.

What is a Letter of Interest for Business?

A letter of interest is a non-binding file among two parties who intend to conduct business with each other. With this letter, the parties involved acknowledge to finalize the transaction with a legally binding contract.

Letters of interest can be used for a variety of agreements involving material purchases, such as:

Joint venture agreements
Merger and acquisition transaction agreements
Real estate property lease agreements

Importance of Writing This Letter

The purpose of writing a letter of interest may differ depending on the situation. But here are some:

Despite the fact that it is not a legally binding document, one of the most significant reasons for preparing a Letter of Interest is that it can give safeguards for both stakeholders.
It includes the necessity to outline and comply on the fundamental terms of the business transaction before increasing access to in-depth negotiations and planning.
It specifies the contract type, such as sales or purchase, merger, or joint venture.
It protects interested parties in case the deal does not work out.
It also binds both parties through confidentiality and exclusivity provisions.
It includes permitting due to diligence
It declares ongoing negotiation projects
Verifies transaction issues
It incorporates mentioning the deadline, which saves time and money for all parties involved.

How to Make an Engaging Letter of Interest for Business

Before you craft your own letter, you should clearly state your specific goals and what you want to achieve with the letter of interest. Although you can include detailed information, you should avoid including specific dates related to performance, as this could make the document legally valid. When drafting a letter of interest, take the following steps:

Write the introduction

In this part, you should assert the intention of the document as well as the names of both groups and their respective positions. You should also include a transaction description (what it is you intend to buy or sell).

Describe the transaction records along with the timelines

This section contains a more detailed overview of the transaction, including the type of business transaction you will be joining and a possible sales price, which may change.

You could also enter preliminary timelines for the immediate term process of negotiation, but these should only serve as guidelines.

List contingencies

Both the buyer and the seller can list contingencies that must be met in order for the agreements to continue in this section.

One common contingency is that the deal’s completion is contingent on the buyer’s capability to secure financing. Alternatively, the transaction will take place only if the buyer is satisfied with the due diligence procedures.

Go through due diligence

6. It is where both parties disclose necessary information about future proceedings so that there are no surprises during the ongoing negotiations.

Moreover, this may involve checking records, providing notice that a party will be requesting certain documents and verifying tax and legal documents.

Include covenants and other binding agreements

Both parties may include restrictive covenants in their agreements, which are binding. A nondisclosure agreement, for example, helps protect both parties by restricting them from using information provided during the negotiations for any purpose other than the deal.

Indicate that the agreement is non binding

Except for the subsections you have included, it is necessary to indicate that the letter is nonbinding for both parties.

Include a closing date

You may also set a deadline for the parties to complete the transaction. If the parties do not complete the transaction by the closing date, both the intended transaction and the letter of interest are canceled.

Writing Tips

Here are a few overall factors to think about when writing your Letter of Interest:

Provide accurate information: Double-check if your source of information gives you reliable facts. Although this letter is generally not legally binding, a party may take it to court.
Keep the letter short and simple: It is advisable to state only the steps and agreement details that both parties require to move negotiations forward.
- Moreover, you should also avoid using complicated legal language and keep things simple.
Use an attorney if possible: Although it is not required, it is advisable to to use an attorney when it comes to deciding on terms and conditions for business transactions.
- However, if there are any deals that are not complicated or do not involve major investments, you can craft your own letter.
Draft your letter with professionalism: As the letter is part of your transaction, you should write your letter in a formal tone and avoid using casual language.

After that, do not forget to proofread and check for possible document errors.

Sample and Template

Letter of Interest for Business Template

Here’s the template that outlines the general points you may want to include in your letter.

(Buyer’s Name and position)

(Buyer’s Company)

(Buyer’s Address)

Dear (Seller’s name)

The purpose of this letter is to provide a written expression of the interest of the following Parties:

“Buyer(s)”:

and

“Seller(s):

In which Buyer(s) would purchase the business, materials, services or matters set forth in this Letter from Seller(s). This letter also outlines some of the terms and conditions that a future agreement would include, as well as the exchange of information and documents that should take place in advance of future agreements.

Prospective Transaction

The transaction, which both parties have expressed their interest in, involves (the transaction). Thus, the Prospective Transaction would take in payment of (amount) from (Buyer) to (Seller).

Contingencies

Before parties can hold out a final agreement, (Buyer) must be satisfied with the due diligence processes containing all the information and documents that (Seller) provides, as well as the negotiation of employment contracts.

Due Diligence

(Buyer) asks permission to inspect the financial, contracts, accounting, business records, and other legal documents of (Seller) until the closing of this Letter of Interest. (Buyer) agrees to fulfill with a Confidentiality Agreement and will not directly contact the clients or suppliers of (Seller) unless it is authorized by the latter.

Public Announcements and Confidentiality Agreement

Without the written consent of the relevant party, all parties have agreed not to divulge any information about this letter or any future negotiations. All information shared by [Buyer] and [Seller] will be kept strictly private between the parties and their legal counsel.

Expenses

All parties agree to shoulder their own expenses, including any professional or legal fees incurred as a result of due diligence or any other matter related to the proposed transaction.

Nonbinding Agreement

Except for the “Public Announcements and Confidentiality Agreement” section, this Letter of Interest is nonbinding on both parties.

Closing Date

The transaction should be completed no afterward than (date). If the parties do not complete the transaction, the “Public Announcements and Confidentiality Agreement” clause, as well as any other Confidentiality Agreement, remains in effect.

Sincerely,

Agreed to by Buyer(s)

…………………Date:…………..

And Accepted and Agreed by Seller(s)

…………………Date:………….

Letter of Interest for Business Example

Ms. Viella, CEO

BC Solutions

567 Green St.

San Diego, California

Dear Mr. Smith

The purpose of this letter is to provide a written expression of the interest of the following Parties:

Buyer: Ms. Viella

and

Seller: Mr. Smith

In which BC Solutions would purchase the business, materials, services or matters set forth in this Letter from Viva Co. This letter also outlines some of the terms and conditions that a future agreement would include, as well as the exchange of information and documents that should take place in advance of future agreements.

Prospective Transaction

The transaction, which both parties have expressed their interest in, involves the sale of a 50 percent share of Viva Co. to BC Solutions. Thus, the Prospective Transaction would take in payment of two hundred fifty thousand dollars from BC Solutions to Viva Co.

Contingencies

Before parties can hold out a final agreement, BC Solutions must be satisfied with the due diligence processes containing all the information and documents that Viva Co. provides, as well as the negotiation of employment contracts.

Due Diligence

BC Solutions asks permission to inspect the financial, contracts, accounting, business records, and other legal documents of Viva Co. until the closing of this Letter of Interest. BC Solutions agrees to fulfill a Confidentiality Agreement and will not directly contact the clients or suppliers of Viva Co. unless it is authorized by the latter.

Public Announcements and Confidentiality Agreement

Without the written consent of the relevant party, all parties have agreed not to divulge any information about this letter or any future negotiations. All information shared by BC Solutions and Viva Co. will be kept strictly private between the parties and their legal counsel.

Expenses