Letter of Intent

Coming off the high of a manic Monday in the tech business, Jason and I have decided to follow our Term Sheet series with a new series scintillatingly called “Letter of Intent.”  Deals like eBay / Skype (wow – what a deal – congrats to DFJ, Bessemer, Index, and especially the Skype guys) have to start somewhere, and often the first real “document” that gets negotiated after the foreplay turns serious is the infamous “letter of intent.”

Now – our friend Jack Bauer doesn’t bother with these – he rarely has time to call the lawyers or review documents.  However, most deals – especially those involving private companies – involve a letter of intent.  This sometimes delightful and usually non-binding document (except for things like a no shop agreement) is also known as an LOI, indication of interest (IOI), memorandum of understanding (MOU), and even occassionally a term sheet.

As with the Term Sheet, there are some terms that matter a lot and others that don’t.  There are plenty of mystery words that an experienced deal maker always knows how and where to sprinkle so that he can later say “but “X” implies “Y”, often resulting in much arguing between lawyers.  We’ve had LOIs get done in a couple of hours and had others stretch into periods of several weeks – experience, knowledge, and understanding matter and the LOI negotiation is usually a first taste of the actually negotiating style you will experience from the other party.

We look forward to walking you through this and hopefully concluding before Jack comes back.

  • http://www.internmentcamp.com Raj Bala

    I truly look forward to these as well. If no one has volunteered to start a VC Wiki, I’ll step up to manage and bring some of the pieces together. The information being put out is too valuable to be scattered all across the net.

  • http://p-air.tribe.net P-Air

    Brad, you tease…couldn’t you have started w/the first installment instead of this announcement? ;-) Feels like it’s 8:30p and I’m watching a commercial for news at 11:00p (“Could your drinking water be killing you?…More at 11!”) :-)

    Obviously looking forward to your piece here to see if I’ve been doing things right :-)

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