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Letter of Intent for Asset Purchase

Draft Asset Purchase LOIs in Minutes, Not Hours

12 minutes with CaseMark

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Letter of Intent for Asset Purchase

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Workflow

Letter of Intent for Asset Purchase

Overview

Drafting Letters of Intent for asset purchases requires careful attention to numerous deal terms, legal provisions, and protective clauses. Attorneys spend hours customizing templates, ensuring consistency across sections, and balancing binding versus non-binding provisions while managing client expectations and tight transaction timelines.

Drafting comprehensive Letters of Intent for asset purchases requires balancing non-binding business terms with binding protective provisions like exclusivity and confidentiality. Attorneys spend hours ensuring proper liability allocation, tax planning frameworks, and transaction-specific provisions while maintaining the delicate tone needed for successful M&A negotiations.

CaseMark automates LOI drafting by extracting deal terms from your documents and generating comprehensive letters that properly distinguish binding from non-binding provisions. The AI ensures all critical elements—from asset descriptions to non-compete terms—are addressed while maintaining the professional tone essential for transaction success.

How it works

  1. 1. Upload your documents

  2. 2. AI analyzes and extracts key information

  3. 3. Review and customize the generated content

  4. 4. Export in your preferred format (DOCX, PDF)

What you get

  • Header with Date and Party Information

  • Introduction and Transaction Overview

  • Purchased Assets Description

  • Excluded Liabilities

  • Purchase Price and Allocation

  • Due Diligence Period

  • Non-Competition Agreement Terms

  • Closing Date

  • Definitive Agreement Provisions

  • Non-Binding Nature Clause

  • Exclusivity Period

  • Confidentiality Obligations

  • Signature Blocks for Both Parties

What it handles

  • Header with Date and Party Information

  • Introduction and Transaction Overview

  • Purchased Assets Description

  • Excluded Liabilities

  • Purchase Price and Allocation

  • Due Diligence Period

  • Non-Competition Agreement Terms

  • Closing Date

  • Definitive Agreement Provisions

  • Non-Binding Nature Clause

  • Exclusivity Period

  • Confidentiality Obligations

  • Signature Blocks for Both Parties

Required documents

  • Transaction Overview

    Summary of proposed deal terms including purchase price, asset categories, and preliminary agreement between parties

    .pdf, .docx, .txt

Supporting documents

  • Preliminary Financial Statements

    Financial information about the target business to inform asset valuation and working capital provisions

    .pdf, .xlsx, .docx

  • Asset Lists

    Inventory of tangible and intangible assets to be included in or excluded from the transaction

    .pdf, .xlsx, .docx

  • Prior Correspondence

    Email exchanges or letters between parties documenting agreed-upon terms or negotiation history

    .pdf, .docx, .eml

  • Previous Transaction Documents

    Prior LOIs or purchase agreements from similar transactions to inform structure and preferences

    .pdf, .docx

Why teams use it

Generate complete asset purchase LOIs in 8 minutes versus 3.5 hours manually

Automatically include all critical provisions: exclusivity, confidentiality, due diligence periods, and non-compete terms

Ensure proper distinction between binding and non-binding clauses to protect your client's interests

Customize purchase price allocation, asset descriptions, and liability exclusions with intelligent prompts

Maintain consistency across all document sections with AI-powered drafting that eliminates formatting errors

Questions

Which provisions in a Letter of Intent are legally binding?

Typically, only specific provisions are binding including confidentiality obligations, exclusivity and no-shop commitments, allocation of transaction costs, and governing law provisions. All business terms like purchase price, asset descriptions, and closing conditions are non-binding expressions of intent until a definitive purchase agreement is executed. CaseMark clearly delineates these distinctions in the generated LOI to prevent misunderstandings.

How long should the exclusivity period be in an asset purchase LOI?

The exclusivity period typically ranges from 30 to 90 days depending on transaction complexity and due diligence scope. The period should be long enough for the buyer to complete investigation and negotiate definitive agreements, but not so long that it unreasonably restricts the seller if negotiations fail. CaseMark helps you calibrate the exclusivity duration based on your specific transaction timeline and due diligence requirements.

What's the difference between assumed and excluded liabilities in an asset purchase?

In asset purchases, the buyer typically acquires only specified assets and assumes only explicitly identified liabilities, leaving all other obligations with the seller. Assumed liabilities might include obligations under assigned contracts or specific identified debts, while excluded liabilities typically include accounts payable, tax obligations, litigation, and employee liabilities existing before closing. This structure is a key advantage of asset purchases over stock acquisitions and must be clearly articulated in the LOI.

How should purchase price be allocated among asset categories for tax purposes?

IRC Section 1060 requires purchase price allocation across seven asset classes, from cash and deposits to goodwill and going concern value. Buyers generally prefer allocating more to depreciable assets, while sellers may have different preferences based on their tax situation. The LOI should acknowledge that parties will negotiate a compliant allocation and report consistently on IRS Form 8594, with final allocation typically determined during definitive agreement negotiations after complete asset valuations are available.

What due diligence access should be granted in an asset purchase transaction?

The seller should provide reasonable access to business premises, all books and records, contracts, financial statements, employee information, customer and supplier data, and intellectual property documentation. Access should be structured to avoid business disruption, with site visits scheduled in advance and sensitive customer contacts limited until later stages. CaseMark generates due diligence provisions that balance the buyer's need for comprehensive investigation with the seller's need to protect confidentiality and maintain normal operations.

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