Letter of Intent (LOI)

A document in which an individual or company acknowledges an intention to do business. The intention may or may not depend on certain conditions being met and the document is not legally binding, it is just a document stating serious intent to carry out certain business activities.

A letter of intent is most often issued as acknowledgment of the fact that an acquisition or a merger between companies is being considered seriously. It may also be issued by a mutual fund shareholder to indicate that they would like to invest certain amounts of money at certain specified times. In exchange for signing a letter of intent, the shareholder would often qualify for reduced sales charges.