Letters of Intent: Considerations for Sellers
A memo written by Venture Capital and Emerging Companies Practice Co-chair Jeremy Glaser and Associate Stephen Callegari was referenced in a DealLawyers.com update about letters of intent (LOI). The Mintz memo provides an overview of some of the key issues that sellers should understand fully before signing up for a letter of intent.
The authors write, "Sellers should evaluate if a working capital collar (i.e. a band surrounding the working capital target where no adjustment up or down is made) is appropriate to avoid nickel and diming in the ultimate working capital adjustment. Addressing these points at the LOI stage is more likely to yield a positive result for the sellers as the buyer is more likely to make concessions at this point in order to secure the deal and get the sellers to sign the LOI and agree to exclusivity."
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