Offer to Purchase Or Letter of Intent. Both terms are used to describe an offer made to purchase a business. An over_simplification of the definition of both documents is: An Offer to Purchase is usually written in contract form and defines the price, terms and conditions of the sale, and is usually accompanied by an earnest money deposit. A Letter of Intent (LOI) is usually written in letter form and also defines the price and the terms and conditions but usually doesn't call for an earnest money deposit.
Ziad K. Abdelnour, President & CEO Blackhawk Partners, Inc, the New York_based advisory firm on such matters, puts it this way: "Giving a Letter of Intent only means 'Yes I'm intent to buy the goods but I can change my mind anytime.' A letter of Intent is not a binding contract. [Hence] The Letter of Intent is a total waste of time on a worthless piece of paper."