Letter of Intent to Purchase all the Shares of a Corporation

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This Letter of Intent to Purchase All Shares of a Corporation effectively outlines an intent to purchase shares. This letter sets out all purchase terms including the purchase price, number of shares and conditions precedent to closing.

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This Letter of Intent to Purchase All Shares of a Corporation effectively outlines your intent to purchase a corporation's shares. This letter sets out the name of the buyer, corporation whose shares will be purchased and the total number of shares to be purchased from each shareholder. It also includes the total purchase price, conditions precedent to closing and date of closing. It is imperative that this intent to purchase be clearly set out in writing and not via oral agreement. A written Letter of Intent to Purchase All Shares of a Corporation will prove invaluable in the event of disagreements, misunderstandings or litigation.

This Letter of Intent to Purchase All Shares of a Corporation includes the following:
  • Parties: Identity of the buyer, corporation whose shares will be acquired, name of the individual shareholders and number of shares owned by each;
  • Purchase Price/Closing: Sets forth the closing date, purchase price of the shares, requirements regarding minimum working capital and all conditions precedent to closing;
  • Binding Agreement: Spells out the representations and warranties made by all parties before closing, including parties' disclosure and termination of this intent to purchase if the closing does not occur by the specified closing date;
  • Signatures: The buyer, a corporate representative and all shareholders must sign this letter of intent.

Protect yourself and your rights by using our attorney-prepared forms.

This attorney-prepared packet contains:
  1. General Information
  2. Letter of Intent to Purchase All Shares
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Letter of Intent to Purchase all the
Shares of a Corporation
 
 
[Date (ie. July 31, 2002)]
 
[Name of Selling Shareholder(s)][Address of Selling Shareholder(s)]
Dear Sir or Madam:
Re:   [Name of Corporation whose Shares are being Acquired]
This letter outlines the terms and conditions under which we intend to purchase from you all the shares of the above corporation:
Buyer:
[Name of Buyer]
Corporation:
[Name of Corporation whose Shares are being Acquired]
Selling Shareholder(s):
[Name of Shareholder 1] and [Name of Shareholder 2]
Shareholdings:
[Name of Shareholder 1] 
[No. of Common Shares (ie. 40)] Common Shares
 
[Name of Shareholder 2] 
[No. of Common Shares (ie. 60)] Common Shares
PART A  NON-BINDING AGREEMENT
Closing Date:
[Closing Date (ie. April 1, 2003)]
Purchase Price:
[Aggregate Purchase Price (ie. $300,000.00)]
Payment of Purchase Price:
[Amount Payable on Closing (ie. $100,000)] on Closing[Amount Payable 60 days after Closing (ie. $200,000)] 60 days after Closing
Working Capital Minimum:
The Purchase Price has been established based on the assumption that the Corporation will continue to operate its business in the ordinary course up to Closing.  On Closing, the parties agree that the Corporations Working Capital will be at least [Minimum Working Capital on Closing (ie. $50,000.00)]. Working Capital is defined as the sum of accounts receivable and cash less accounts payable, accrued liabilities and any other current liabilities incurred in the normal course of business, calculated in accordance with GAAP as of Closing.
Within 60 days after Closing, the Corporation will deliver a Closing balance sheet to Buyer together with a calculation of Working Capital.  If the Corporations Working Capital is less than [Minimum Working Capital on Closing (ie. $50,000.00)], then the Purchase Price will be adjusted downwards by an amount equal to [Minimum Working Capital on Closing (ie. $50,000.00)] less the actual amount of Working Capital (the “Working Capital Deficiency”).  The Selling Shareholder(s) shall immediately remit the Working Capital Deficiency to Buyer. For greater certainty, any Working Capital Deficiency will be paid by the Selling Shareholder(s) directly.
Conditions Precedent:
Buyers obligations to complete the transaction contemplated by this Letter will be subject to the conditions that:
1.   Regulatory approvals are received, if required;
2.   There is no material adverse change in the Corporations business prior to Closing;
3.   Buyer is satisfied, in its sole discretion, with the results of its due diligence;
4.   There is satisfactory completion and execution of legal agreements pertaining to this transaction, including representations and warranties customary in transactions of this type.
These conditions are inserted for Buyers benefit and may be waived by Buyer at its sole discretion.
Tax Issues:
Buyer and the Selling Shareholder(s) agree that they will endeavor to work together to structure this transaction on a mutually beneficial basis for income tax purposes.
Post Closing Assistance From Selling Shareholder(s):
In order to assist with the transition of the Corporations business to Buyer, the Selling Shareholder(s) agree to work full-time on a consulting basis for Buyer for a period up to six months after Closing. However, Buyer shall be under no obligation to retain the services of the Selling Shareholder(s) at any time during this period. The parties agree that the Selling Shareholder(s) shall each be paid for their consulting services at the rate of [Daily Consulting Fee payable to Selling Shareholder(s) (ie. $200.00)] per day (prorated for partial days).  The parties acknowledge that the Selling Shareholder(s) will work approximately 60 hours combined per week, at Buyers request, and will use their best efforts to assist Buyer with the transition of the Corporations ownership.
Currency:
All dollar amounts and currency referred to in this Letter of Intent shall refer to lawful currency of the United States of America.
Transaction Costs:
All legal, accounting and other professional fees incurred by the Selling Shareholder(s) and the Corporation in connection with the transaction contemplated herein will be for the account of the Selling Shareholder(s).
Review of Information:
Between the date of this Letter and the Closing Date, the Corporation and the Selling Shareholder(s) shall provide, or cause to be provided, to Buyer and Buyers representatives, access to all offices, representatives and records of the Corporation to conduct such investigations and reviews as they in their sole discretion determine to be advisable from time to time. The Corporation and the Selling Shareholder(s) shall also co-operate to the fullest extent possible in arranging such meetings, as Buyer considers necessary or desirable in its sole discretion between Buyer's representatives and any employees of the Corporation designated by Buyer from time to time, provided that Buyer will seek the permission of the Selling Shareholder(s) before arranging any meeting or holding any discussions with any other employees of the Corporation. The Corporation shall authorize those described above to grant full disclosure of all information relating to the Corporation to Buyer's representatives.
PART B  BINDING AGREEMENT
Standstill:
During the 90 day period immediately following the date of acceptance of this Letter of Intent (the “Standstill Period”) or unless the parties herein mutually agree as a result of the termination of the transaction contemplated herein, the Corporation and the Selling Shareholder(s) shall not, and shall ensure that their representatives do not, solicit, initiate, encourage, entertain or negotiate in respect of any proposal or offer from, or provide any information relating in any way to the Corporation, or any of its businesses or investments, to any person, entity or group in connection with a possible investment in the Corporation, or any acquisition of any of its outstanding securities, or all or any substantial part of its assets.
Representation and Warranty:
The Corporation and the Selling Shareholder(s) jointly and severally represent and warrant that the entering into of this Letter of Intent and the consummation of the transactions contemplated hereby will not breach the terms of (i) any agreement or understanding to which they are a party, or (ii) to the best of their knowledge, any law, rule or regulation.
Disclosure:
Except as agreed to in writing by the parties, no disclosure of this letter or anything which it contemplates shall be made by the Corporation, the Selling Shareholder(s), Buyer or any of their respective representatives, except as may be required by applicable law or regulatory authorities, in which case notice of such required disclosure shall be provided to the other party in advance of such disclosure.
Termination Date:
If Closing does not occur within by the Closing Date, all of the provisions of this Letter of Intent, except those set out beside the headings “Representation and Warranty”, “Disclosure”, “Indemnification”, and “Standstill”, shall terminate and neither party will have any obligation to the other.
Legal Effect:
The provisions of Part B of this Letter shall be legally binding upon, and inure to the benefit of Buyer, the Selling Shareholder(s) and the Corporation, and their respective successors, administrators and assigns. Except for Part B, this Letter is an expression of the intent of Buyer, the Selling Shareholder(s) and the Corporation to proceed with the transaction(s) contemplated and shall not give rise to any legal rights or obligations.
Governing Law:
This Letter shall be governed by, and construed in accordance with, the laws of the State of [State (ie. California)].
 
By signing where indicated below, you acknowledge that the Buyers and the Corporations obligations will be determined and set out in final documentation executed by you and us, which documentation must be in a form satisfactory to both you, us and our respective counsel.
If you are in agreement with the foregoing, kindly signify your acceptance by signing the second copy of this Letter in the manner provided below and returning it to us on or before [Expiration Date of Letter of Intent] failing which this Letter shall be of no effect.
Yours very truly,
 
[Name of Buyer]
THE UNDERSIGNED HEREBY ACKNOWLEDGE and agree to the terms and conditions as set out above and confirms its full and binding authority to enter into these arrangements this __ day of _______________________, 20_____.
 
[Name of Selling Shareholder 1]
 
[Name of Selling Shareholder 2]
 
[NAME OF CORPORATION]
 
 
Per:
 
 
Name:   
Title:   
 
Number of Pages7
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#28836
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Letter of Intent to Purchase all the
Shares of a Corporation
 
 
[Date (ie. July 31, 2002)]
 
[Name of Selling Shareholder(s)][Address of Selling Shareholder(s)]
Dear Sir or Madam:
Re:   [Name of Corporation whose Shares are being Acquired]
This letter outlines the terms and conditions under which we intend to purchase from you all the shares of the above corporation:
Buyer:
[Name of Buyer]
Corporation:
[Name of Corporation whose Shares are being Acquired]
Selling Shareholder(s):
[Name of Shareholder 1] and [Name of Shareholder 2]
Shareholdings:
[Name of Shareholder 1] 
[No. of Common Shares (ie. 40)] Common Shares
 
[Name of Shareholder 2] 
[No. of Common Shares (ie. 60)] Common Shares
PART A  NON-BINDING AGREEMENT
Closing Date:
[Closing Date (ie. April 1, 2003)]
Purchase Price:
[Aggregate Purchase Price (ie. $300,000.00)]
Payment of Purchase Price:
[Amount Payable on Closing (ie. $100,000)] on Closing[Amount Payable 60 days after Closing (ie. $200,000)] 60 days after Closing
Working Capital Minimum:
The Purchase Price has been established based on the assumption that the Corporation will continue to operate its business in the ordinary course up to Closing.  On Closing, the parties agree that the Corporations Working Capital will be at least [Minimum Working Capital on Closing (ie. $50,000.00)]. Working Capital is defined as the sum of accounts receivable and cash less accounts payable, accrued liabilities and any other current liabilities incurred in the normal course of business, calculated in accordance with GAAP as of Closing.
Within 60 days after Closing, the Corporation will deliver a Closing balance sheet to Buyer together with a calculation of Working Capital.  If the Corporations Working Capital is less than [Minimum Working Capital on Closing (ie. $50,000.00)], then the Purchase Price will be adjusted downwards by an amount equal to [Minimum Working Capital on Closing (ie. $50,000.00)] less the actual amount of Working Capital (the “Working Capital Deficiency”).  The Selling Shareholder(s) shall immediately remit the Working Capital Deficiency to Buyer. For greater certainty, any Working Capital Deficiency will be paid by the Selling Shareholder(s) directly.
Conditions Precedent:
Buyers obligations to complete the transaction contemplated by this Letter will be subject to the conditions that:
1.   Regulatory approvals are received, if required;
2.   There is no material adverse change in the Corporations business prior to Closing;
3.   Buyer is satisfied, in its sole discretion, with the results of its due diligence;
4.   There is satisfactory completion and execution of legal agreements pertaining to this transaction, including representations and warranties customary in transactions of this type.
These conditions are inserted for Buyers benefit and may be waived by Buyer at its sole discretion.
Tax Issues:
Buyer and the Selling Shareholder(s) agree that they will endeavor to work together to structure this transaction on a mutually beneficial basis for income tax purposes.
Post Closing Assistance From Selling Shareholder(s):
In order to assist with the transition of the Corporations business to Buyer, the Selling Shareholder(s) agree to work full-time on a consulting basis for Buyer for a period up to six months after Closing. However, Buyer shall be under no obligation to retain the services of the Selling Shareholder(s) at any time during this period. The parties agree that the Selling Shareholder(s) shall each be paid for their consulting services at the rate of [Daily Consulting Fee payable to Selling Shareholder(s) (ie. $200.00)] per day (prorated for partial days).  The parties acknowledge that the Selling Shareholder(s) will work approximately 60 hours combined per week, at Buyers request, and will use their best efforts to assist Buyer with the transition of the Corporations ownership.
Currency:
All dollar amounts and currency referred to in this Letter of Intent shall refer to lawful currency of the United States of America.
Transaction Costs:
All legal, accounting and other professional fees incurred by the Selling Shareholder(s) and the Corporation in connection with the transaction contemplated herein will be for the account of the Selling Shareholder(s).
Review of Information:
Between the date of this Letter and the Closing Date, the Corporation and the Selling Shareholder(s) shall provide, or cause to be provided, to Buyer and Buyers representatives, access to all offices, representatives and records of the Corporation to conduct such investigations and reviews as they in their sole discretion determine to be advisable from time to time. The Corporation and the Selling Shareholder(s) shall also co-operate to the fullest extent possible in arranging such meetings, as Buyer considers necessary or desirable in its sole discretion between Buyer's representatives and any employees of the Corporation designated by Buyer from time to time, provided that Buyer will seek the permission of the Selling Shareholder(s) before arranging any meeting or holding any discussions with any other employees of the Corporation. The Corporation shall authorize those described above to grant full disclosure of all information relating to the Corporation to Buyer's representatives.
PART B  BINDING AGREEMENT
Standstill:
During the 90 day period immediately following the date of acceptance of this Letter of Intent (the “Standstill Period”) or unless the parties herein mutually agree as a result of the termination of the transaction contemplated herein, the Corporation and the Selling Shareholder(s) shall not, and shall ensure that their representatives do not, solicit, initiate, encourage, entertain or negotiate in respect of any proposal or offer from, or provide any information relating in any way to the Corporation, or any of its businesses or investments, to any person, entity or group in connection with a possible investment in the Corporation, or any acquisition of any of its outstanding securities, or all or any substantial part of its assets.
Representation and Warranty:
The Corporation and the Selling Shareholder(s) jointly and severally represent and warrant that the entering into of this Letter of Intent and the consummation of the transactions contemplated hereby will not breach the terms of (i) any agreement or understanding to which they are a party, or (ii) to the best of their knowledge, any law, rule or regulation.
Disclosure:
Except as agreed to in writing by the parties, no disclosure of this letter or anything which it contemplates shall be made by the Corporation, the Selling Shareholder(s), Buyer or any of their respective representatives, except as may be required by applicable law or regulatory authorities, in which case notice of such required disclosure shall be provided to the other party in advance of such disclosure.
Termination Date:
If Closing does not occur within by the Closing Date, all of the provisions of this Letter of Intent, except those set out beside the headings “Representation and Warranty”, “Disclosure”, “Indemnification”, and “Standstill”, shall terminate and neither party will have any obligation to the other.
Legal Effect:
The provisions of Part B of this Letter shall be legally binding upon, and inure to the benefit of Buyer, the Selling Shareholder(s) and the Corporation, and their respective successors, administrators and assigns. Except for Part B, this Letter is an expression of the intent of Buyer, the Selling Shareholder(s) and the Corporation to proceed with the transaction(s) contemplated and shall not give rise to any legal rights or obligations.
Governing Law:
This Letter shall be governed by, and construed in accordance with, the laws of the State of [State (ie. California)].
 
By signing where indicated below, you acknowledge that the Buyers and the Corporations obligations will be determined and set out in final documentation executed by you and us, which documentation must be in a form satisfactory to both you, us and our respective counsel.
If you are in agreement with the foregoing, kindly signify your acceptance by signing the second copy of this Letter in the manner provided below and returning it to us on or before [Expiration Date of Letter of Intent] failing which this Letter shall be of no effect.
Yours very truly,
 
[Name of Buyer]
THE UNDERSIGNED HEREBY ACKNOWLEDGE and agree to the terms and conditions as set out above and confirms its full and binding authority to enter into these arrangements this __ day of _______________________, 20_____.
 
[Name of Selling Shareholder 1]
 
[Name of Selling Shareholder 2]
 
[NAME OF CORPORATION]
 
 
Per:
 
 
Name:   
Title:   
 

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