Most bank acquisitions start with a conversation and proceed to
a letter of intent before the binding definitive purchase agreement
is signed. Is a letter of intent necessary? Probably. Having a
general understanding of the key terms of the deal before diving
into a definitive agreement will probably save you time and
money.
There are several key subjects that a well-drafted letter of
intent should cover. Foremost among them is the purchase price and
the form in which it will be paid. In most bank acquisitions, the
price is paid in cash at closing with perhaps an escrow to cover
indemnification claims or specific issues like problem loans. Also
an important issue, because it involves money, is whether key
employees of the seller will be employed after the closing and, if
so, if they will have employment agreements. If the key employees
or officers are not to be employed after the closing of the sale,
it is helpful to point out whether they will be asked or
