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For example, there may be soil contamination in which the buyer will not want to purchase the property and will safely option out of the non_binding contract. Or, perhaps the property is in a lot worse condition than originally thought, causing the buyer to negotiate a decreased purchase price.

The key points most commonly compiled in an LOI include: type of acquisition (stock or asset), detailed list of assets (and liabilities) to be acquired, purchase price, payment method, contingencies, data required to complete due diligence, and target dates for contract signing and closing. At its most basic level, the LOI says that, as long as certain criteria specified in the LOI is as represented by the seller, the buyer will purchase the company consistent with the terms outlined in the LOI.

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