Document background
A Letter of Intent to Purchase Business is a crucial document in the early stages of a business acquisition process under German law. It is typically used after initial discussions have yielded positive results but before comprehensive due diligence and final negotiations begin. The document serves multiple purposes: it demonstrates serious intent to proceed with the transaction, outlines key commercial terms, establishes a framework for due diligence and negotiations, and provides certain binding commitments (particularly regarding confidentiality and exclusivity). While predominantly non-binding, under German law, certain provisions can create legal obligations through the principle of culpa in contrahendo, making precise drafting essential. The document needs to balance providing sufficient detail to progress the transaction while maintaining flexibility for final negotiations. It's particularly important in the German market where business purchases often involve complex regulatory considerations and stakeholder consultations.
