Document background
The Letter of Intent to Purchase Business is a crucial initial document in business acquisition transactions in the Philippines. It is typically used after preliminary discussions between parties but before detailed due diligence and final negotiations commence. This document serves multiple purposes: it demonstrates serious intent to pursue the transaction, outlines key terms and conditions, establishes a framework for due diligence, and may secure temporary exclusivity for the potential buyer. While governed by Philippine law, particularly the Civil Code and Corporation Code, the letter remains largely non-binding except for specific provisions like confidentiality. It's an essential tool for both domestic and foreign investors interested in acquiring Philippine businesses, though foreign investors must pay special attention to ownership restrictions in certain industries. The document typically precedes more detailed agreements such as the definitive purchase agreement.
