A letter of intent summarizes proposed terms for a possible transaction before definitive agreements are signed.
Definition
In a civil engineering firm sale or ownership transition, a letter of intent (LOI) can outline proposed price, transaction structure, timing, diligence, and other negotiating points. Its wording may make some provisions binding, such as confidentiality or exclusivity, while leaving other terms nonbinding; the document should identify their status. The effect depends on the language and applicable law. Owners use an LOI to establish a working framework for diligence and later agreements, but it does not necessarily complete a sale or settle every material term. It is not a substitute for the definitive purchase agreement, which sets out the final transaction obligations. Before signing, parties commonly review the proposed process, deadlines, and restrictions alongside the financial terms. The ACEC provides engineering industry resources, but the parties’ documents govern their transaction.
How owners use it
- An owner uses the LOI to see how the proposed price, structure, and payment timing are described.
- The parties use stated diligence deadlines to coordinate financial, contract, and project record review.
- An LOI proposes $3 million at closing plus $500,000 later: $3,000,000 + $500,000 = $3,500,000 proposed total consideration, subject to final terms.
- Owners identify which clauses are binding and what actions or deadlines those clauses create.
