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Other Names: Deal Contract
Deal Letter document preview

What is a Deal Letter?

If you are making a business transaction such as buying stock, or even an entire business, you can use a Deal Letter to specify to the other party what the terms of the deal are. A Deal Letter is commonly used for business ventures (Joint-Venture Agreements) and trading (Shares Purchase Agreements), as well as merger and acquisitions, in which a Deal Letter is used to describe a firm's plan to buy or take over another company. 
 
On the Deal Letter you should provide the names of the parties, the subject matter of this business deal and the closing date should be specified. It could be a sale of different assets, or an entire business. Using the Deal Letter, the purchaser of a company can specify the date of, and requirements for, final due diligence, including: an evaluation of the industry indicating the likelihood of the company's achieving the projections provided by the company to purchaser, and an evaluation of the overall financial condition of the company.

When to use a Deal Letter:

  • You're entering a business deal.
  • You're asked someone to participate in a business deal.
  • You're a business operator thinking about merging with, or acquiring, another business.

Sample Deal Letter

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CONFIDENTIAL

 

 

Re:

 

Dear ,

 

We would like to thank you for providing with the opportunity to submit this non-binding to , together with the attached term sheet labeled as Exhibit A (the "Term Sheet"), for the purchase of

 

 

(the "Assigned Interests") (collectively, the "Transaction").

 

This and the attached Term Sheet serve to outline the material terms and conditions pursuant to which

 

 

, would be prepared to consummate the Transaction. Unless otherwise required by law, the terms and existence of this proposal are confidential and should not be disclosed or shared without the prior written consent of Purchaser with anyone other than the Company's officers, directors, and legal, tax and accounting advisors. This proposal expires on unless executed and delivered by you before such date.

 

1. Conditions to Closing.

We anticipate that the necessary steps to reach a closing (the "Closing") should be completed by (the "Closing Date"). These steps, which are conditions to the obligation to consummate the Transaction, are outlined below:

 

a. The negotiation, execution and delivery of mutually acceptable definitive agreements under law regarding the Transaction. We anticipate that such agreements would contain usual and customary terms and conditions, including representations and warranties typical for such transactions, all as negotiated by the parties. The parties recognize that this is a non-binding deal and that, during the course of due diligence and finalizing the Transaction documents, there may be additional elements for negotiation and inclusion. We understand that the Company is a party to certain agreements that affect or may affect the Transaction and/or the rights that the Company may grant to Purchaser. Those agreements are as follows:

 

 

b. Receipt of all applicable consents, including board, partnership and regulatory approvals, if any, relating to the Transaction.

 

c. The completion of substantially all due diligence by Purchaser and its legal counsel and tax advisors with results satisfactory to Purchaser in its sole discretion, by no later than or as extended by the mutual written agreement of both parties (the "Due Diligence Completion Date"). Purchaser's final due diligence must include, but not necessarily be limited to the following:

 

.a review of any license and marketing agreements;

2. Notice After Completion of Due Diligence.

On or before the Due Diligence Completion Date, Purchaser shall notify Company in writing that it has successfully completed substantially all of its due diligence and is prepared to proceed to consummate the Transaction (a "Notice of Intention to Proceed"). If Purchaser does not provide such Notice of Intention to Proceed to Company on or before the Due Diligence Completion Date, the Company may cancel this proposal and notwithstanding anything contained herein to the contrary, Company shall have no obligation or liability to Purchaser and Purchaser shall have no obligation or liability to Company.

 

3. Extension of Time for Closing.

It is anticipated that the successful closing of the Transaction will be completed as soon as is practical but by no later than the Closing Date. If the Transaction is not completed by the Closing Date and Purchaser has been proceeding in good faith to complete its due diligence and negotiate the transaction documents in order to consummate the Transaction, Purchaser and Company shall evaluate the progress made towards closing and, if suitable progress is being made, discuss in good faith a revised Measurement Period (as defined below) and Closing Date. In the event satisfactory progress has not been made towards closing or if the Closing Date cannot occur by 15 days either Purchaser or Company may withdraw from the Transaction without any further obligation or liability to the other party except that the Company obligations in Section 5 shall survive. Any party withdrawing from the Transaction pursuant to the preceding sentence shall promptly inform the other party in writing of such termination, notwithstanding any other provision contained herein. As used herein, the term "Measurement Period" shall mean the period from the date of this proposal until the Closing Date, if on or prior to the Due Diligence Completion Date Purchaser has sent the Notice of Intention to Proceed.

 

4. Expenses.

Each party shall be responsible for and bear all of its own costs and expenses incurred in connection with the proposed Transaction except as outlined in Section 5.

 

5. Break-up Fees and Costs.

In consideration of the substantial time, effort and expense to be incurred by Purchaser in order to consummate a transaction, Company agrees as follows:

a. No fee will be due to Purchaser if either: (i) the Transaction is consummated by Purchaser and Company; (ii) Purchaser withdraws from the proposed Transaction; or (iii) Purchaser does not deliver a Notice of Intention to Proceed before .

b. If (i) Company withdraws from the proposed Transaction, or (ii) after the Due Diligence Completion Date, Purchaser is prepared in good faith to proceed to consummate the Transaction with Company contemplated by this proposal, and Company does not consummate the Transaction on or before the Closing Date, Company shall pay Purchaser's legal, accounting and other documented out-of-pocket due diligence expenses incurred in undertaking due diligence investigations and negotiating and preparing transaction documentation in connection with the Transaction.

 

6. Post-closing Rights re: Future Transactions.

After the Closing, should Company or its affiliates desire to sell:

;

 

Company shall provide Purchaser with all pertinent information relating to such proposed transaction, and shall give Purchaser the right to make an offer to participate therein.

 

7. Access to Information.

Company shall provide Purchaser and its advisors reasonable access during normal business hours to the key personnel of Company and its books and records and shall otherwise fully cooperate in facilitating the due diligence review by Purchaser.

 

8. No Public Disclosures.

Under no circumstances shall either Purchaser or Company make any public disclosure about the Transaction prior to the Closing. Any such disclosure at or after the Closing must be mutually agreeable to both parties; provided, however, that nothing in this provision will prevent the Company from fulfilling any legal disclosure obligations.

 

9. Exclusive Dealing.

The Company agrees that from the date hereof until the Closing Date, the Company shall neither directly nor indirectly, through brokers, agents or otherwise, solicit or accept offers or conduct negotiations or enter into contracts with respect to the Assigned Interests or a Replacement Transaction. Should the Company receive an unsolicited offer relating to the Assigned Interests, it will promptly refuse such offer. The provisions of this Section 9 shall terminate and be of no further effect upon the occurrence of any of the circumstances described in Section 5a. (ii) or (iii), above.

 

10. Binding Provisions.

This agreement is an expression of the intent of the parties and is not intended to create legally binding rights or obligations, except to the extent provided in Sections 2 through 11 hereof.

 

11. Governing Law.

This shall be governed by and construed in accordance with the laws of the State of

 

We look forward to working with you to consummate this Transaction. Should you find this acceptable, please have an authorized Company representative execute where indicated below and return to us by mail at , , ,

 

Yours truly,

 

 

 

By:   Date:

 

 

Attach Exhibit A Term Sheet

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