Letter of Intent
The starting point for a merger & acquisition transaction in Switzerland is quite often the signing of a letter of intent (LOI). The potential buyer intends to conduct due diligence (dd) on the targeted entity. The seller needs protection against the transfer of business secrets. Generally the LOI contains secrecy clauses that protect the seller and allow the potential buyer to begin dd. Furthermore, the parties often stipulate in the LOI the extent of the dd to be conducted, the timetable for the transaction and the procedural issues involved with the dd procedure. LOIs may also contain exclusivity clauses, since the dd procedure involves substantial costs, and since the potential buyer incurs those costs only if he has assurance of being the only bidder. Other clauses contained in an LOI include the initial proposed purchase price and other issues essential to the proposed purchase agreement. It is not unusual that a disagreement on material issues is identified at
