Declaration of intent

What is in a declaration of intent?

Declarations of intent come in all shapes and sizes: from a single A4 sheet of paper with a few general agreements to an extensive declaration, that in fact constitutes a provisional sales contract. You can ask an expert, for instance a lawyer, to help you draw up the declaration of intent. The declaration of intent usually contains the following points:

• period during which the declaration is valid;
• exclusivity clause: you are not allowed to negotiate with other parties;
• determination of value: how to calculate your company value, what to include and what not;
• caveats / commitments: how binding is the agreement;
• applicable law, for instance, you can include that Dutch law applies to this declaration;
• Disputes procedure, for instance, that disputes will be submitted to the district court in Rotterdam.

Further negotiations after the declaration of intent

Once you have finalised the declaration of intent, any further negotiations serve mainly to flesh out the details and remove any differences of opinion. In this phase, you record the final details, often together with a takeover advisor, a lawyer and a notary. This usually leads to a purchase agreement.

Withdrawing from the negotiations

As long as the purchase agreement has not been signed, it is possible for you or the buyer to withdraw from the negotiations. That is, unless the negotiations have reached a stage where the declaration of intent is really a provisionary purchase agreement. If that is the case, the withdrawing party may have to compensate the costs and even lost profits of the other party.