Virtual Data Room FAQ Hub

What Happens After a Letter of Intent?

After a Letter of Intent, or LOI, is signed in an M&A transaction, the deal usually moves into a more detailed phase of due diligence, negotiation, and preparation for a definitive agreement.

The LOI outlines the main proposed terms of the transaction, but it is generally not the end of the process.

Many important details still need to be verified, negotiated, and documented before closing can occur.

Due Diligence Usually Intensifies

The buyer typically begins or expands its review of the target company.

This may include financial, legal, tax, commercial, operational, technology, intellectual property, HR, regulatory, and other diligence.

The seller provides supporting information, often through a virtual data room, while the buyer and its advisors analyze the business and raise follow-up questions.

The purpose is to determine whether what the buyer learns supports the assumptions made when the LOI was negotiated.

Findings Can Affect the Deal

Due diligence findings may influence the transaction.

A newly identified liability, financial issue, customer risk, or contractual problem could lead the buyer to request changes to price, structure, representations, indemnification, or other terms.

Not every finding changes the deal.

But the period after the LOI is when many of the assumptions behind the proposed transaction are tested against detailed information.

Definitive Agreements Are Negotiated

Attorneys for both sides typically begin or continue negotiating the definitive purchase agreement.

The agreement contains far more detail than the LOI and addresses issues such as purchase price mechanics, representations and warranties, covenants, closing conditions, indemnification, and other legal terms.

Additional agreements may also be required depending on the transaction.

Financing and Approvals May Continue

If the buyer requires financing, lenders may conduct their own review.

Regulatory approvals, shareholder approvals, third-party consents, or other conditions may also need to be addressed.

These workstreams can run alongside diligence and legal negotiations.

Preparing for Closing

As open issues are resolved, both sides move toward satisfying the conditions required to close.

The information process remains important throughout this stage.

New diligence requests may continue, documents may need to be updated, and different advisors may require access to specific materials.

The period after an LOI can therefore be one of the most intensive parts of the transaction.

The parties have agreed enough to move forward, but the deal has not yet been fully validated or finalized.

A well-run process helps keep information organized, questions moving, and stakeholders aligned as the transaction progresses from initial agreement toward closing.