Structure, drafting essentials, and the “easy-to-miss” points that matter in execution
In cross-border M&A, people often say that an LOI (Letter of Intent) can shape the entire negotiation—yet the “why” and “where exactly” are rarely laid out in a structured way.
Imagine you are suddenly asked, as the buyer-side lead, to evaluate and pursue an overseas acquisition. You are working with unfamiliar business customs and deal conventions, under time pressure, while trying to produce something “credible” for internal and external stakeholders. In that setting, the first document you exchange—your LOI—can end up defining the contours of everything that follows.
In cross-border deals, an LOI should not be treated as a mere “expression of interest.” The most useful way to think about it in practice is as a Structural Blueprint—a document that sets the framework for which assumptions and which terms the parties will use as the basis for further discussion. “Blueprint” here does not mean fixing every term at the LOI stage; it means defining the negotiation framework that will govern subsequent workstreams.
This article organizes the structure and drafting essentials of cross-border LOIs, with a focus on the “execution-critical” points that are easy to miss if you approach the process with a domestic-deal mindset.
What this article covers
- Why a cross-border LOI is more than a “signal of interest”
- A practical five-block structure for LOIs and what to include in each block
- How a “non-binding” LOI can still constrain negotiation outcomes in practice
- How to present price on an Enterprise Value (EV) basis—and the risk of over-disclosing
- How to set DD scope and access terms (including site visits)
- How to think about “exclusivity / priority” realistically, and how to present financing assumptions
1. The LOI in five blocks (the big picture)
If you structure a cross-border LOI around “what you must prove” and “what uncertainty you must manage,” it can be mapped into five blocks:
| Block | Objective | Typical contents |
|---|---|---|
| 1) Buyer credibility | Build confidence and get selected | Buyer overview, track record, post-deal operating stance |
| 2) Economic terms | Define the price framework | Price indication (typically EV), key assumptions (e.g., DFCF), minimal clarifications |
| 3) DD framework | Enable DD to run smoothly | DD scope, DD window, information access (data room, interviews, site visits) |
| 4) Deal conditions | Set process conditions and funding assumptions | (Bilateral only) priority / exclusivity framework, financing assumptions (debt/equity) |
| 5) Process | Align on the path to signing/closing | Milestones, internal approvals, governing law/jurisdiction (as needed) |
In domestic deals, many assumptions are implicitly shared. In cross-border deals, assumptions are often not shared—so even blocks (2) through (5) can become negotiation points unless you define them clearly.
2. The nature of the LOI: non-binding, yet a negotiation “coordinate system”
A pre-DD LOI is generally non-binding in legal terms. The practical risk is not that people “think anything is fine” because it is non-binding. Rather, in cross-border situations—limited time, imperfect information, uncertain counterpart expectations—teams can slip into a “let’s submit a first draft and adjust later” mode.
That approach can become expensive in cross-border deals for two reasons:
LOI as an Anchor
After DD, if you need to revisit price or terms, the discussion almost always starts from the assumptions stated in the LOI. Adjustments are absolutely legitimate when DD reveals new facts—but changes without a credible link to facts can damage trust quickly and materially.
Consistency as a Currency
In cross-border negotiations, language and cultural distance amplifies how counterparties assess consistency. It is not only the seller evaluating the buyer’s consistency; the buyer should evaluate the seller’s consistency as well. A seller whose assumptions or narrative changes repeatedly is, by itself, a meaningful red flag. In practice, LOIs tend to bind parties less by legal force and more by negotiation credibility.
The pragmatic takeaway is simple: even if it is legally non-binding, a cross-border LOI often functions as a negotiation coordinate system—and the quality of that coordinate system materially affects execution.
3. Practical drafting points, block by block
1) Buyer credibility: reduce the counterparty’s “understanding cost”
A common (and repeated) mistake in cross-border deals is assuming the seller “already knows” the buyer. Even where there has been business history, sellers often do not have a clear view of: who the buyer is in strategic terms, how decisions are made, and how the buyer will operate post-closing.
This block is both positioning and reassurance. Three practical points matter:
First, speak in numbers.
Use a compact snapshot (e.g., revenue scale, headcount scale, footprint) in a way that is safe to disclose publicly. Numbers are faster to absorb and harder to misinterpret.
Second, tell history selectively.
This is not a corporate chronology. It is a curated narrative that explains why this buyer is credible for this transaction: relevant regional presence, integration experience, strategic rationale for the geography/sector, etc.
Third, state the “future” stance clearly.
In cross-border deals, sellers worry about post-acquisition disruption. Without being overly detailed, your LOI should state your stance on governance and management continuity (e.g., how you think about autonomy, leadership continuity, and decision-making). A high price with a vague post-deal stance can actually increase perceived risk.
2) Economic terms: present EV clearly—and avoid “over-writing” your logic
In cross-border deals, price is not just a number; it is a framework with assumptions. The standard approach is to indicate value on an Enterprise Value (EV) basis first, and then derive Equity Value by adjusting for Net Debt.
Equity Value=Enterprise Value−Net Debt
Net Debt is typically treated as Debt (interest-bearing liabilities, etc.) minus Cash (surplus cash, etc.). Therefore, stating that the price is on a debt-free / cash-free basis (DFCF) is a practical way to clarify that the indicated value is EV and neutral to capital structure.
At the same time, you generally want to avoid writing too much of your valuation logic into the LOI. Over-disclosing “how you got there” can create needless constraints later. For example, explicitly stating an EV/EBITDA multiple as a fixed number can become a reference point the seller will use against you if performance improves or narratives shift. Even if you have internal investment discipline tied to certain metrics, where to draw the line in the LOI should be a deliberate choice.
A practical rule of thumb is: keep valuation logic minimal unless you have a specific defensive reason to include it (e.g., preventing misunderstanding when the counterparty is inexperienced and does not have proper advisory support).
3) DD framework: define scope and access conditions up front
In cross-border deals, DD outcomes are often determined less by “whether DD is conducted” and more by what DD covers and how access is provided. That is why LOIs should clearly state the intended DD scope and access conditions.
At a minimum, the DD scope is typically stated as a list of workstreams, with case-by-case tailoring:
- Legal DD (material contracts, disputes, licenses/permits, IP, etc.)
- Financial DD (accounting, earnings quality, profitability, etc.)
- Tax DD (tax risks, exposures, etc.)
- Business DD (market, competition, customers, go-to-market; sometimes led internally by the buyer)
- As relevant: governance/internal controls, IT/security, environmental, HR/labor and key-person matters, etc.
Separately, access conditions should be stated in practical terms: data room access, management interviews, Q&A process, and document availability. In many industries, site visits are a meaningful diligence tool—so if you have specific facilities you want to visit (key plants, critical equipment, QA/inspection lines, logistics hubs), stating that intent early helps avoid friction later and makes scheduling smoother.
4) Deal conditions: be realistic about priority/exclusivity, and clarify financing assumptions
This section often matters for two reasons: process stability and execution certainty.
Priority / Exclusivity: auction vs. bilateral reality
It is tempting to view exclusivity as “standard,” but in practice exclusivity or priority is often unrealistic in auction processes. Sellers typically want to preserve competitive tension. Designing an LOI around obtaining exclusivity in an auction can create misaligned expectations from the outset.
In bilateral (one-on-one) negotiations, priority or exclusivity can be a real discussion point. If full exclusivity is difficult, a softer priority framework (e.g., a commitment to negotiate first with notification obligations before engaging third parties) can sometimes be a workable middle ground. The key is not the label; it is the practical effect: what the seller will and will not do during the relevant period, and for how long.
Financing assumptions (external funding)
Another execution-critical point is funding. If the buyer is not fully self-funded and may use debt financing and/or equity financing, the LOI should make the financing posture clear at a high level:
- Is the offer effectively fully financed (or close to it), or
- subject to financing (and therefore dependent on external funding)?
You do not need excessive detail, but a complete absence of financing posture can cause sellers to question execution certainty.
5) Process: align on a credible calendar, including internal approvals
In cross-border deals, “when decisions get made” can look like a black box to the other side. Clarifying the process milestones—LOI → DD → SPA → Closing—and indicating where internal approvals sit in that calendar helps reduce uncertainty and build credibility.
Governing law and jurisdiction should be included only where necessary—depending on transaction context and the parties’ locations and preferences.
4. Conclusion: the LOI is both an offensive tool and a defensive line
A cross-border LOI is not a casual preliminary note. It is the work of designing the shortest path to a definitive agreement: build credibility in Block 1, present price clearly (without over-committing your logic) in Block 2, set DD scope and access in Block 3, handle process stability and financing assumptions in Block 4, and align a realistic execution calendar in Block 5.
Once the LOI is submitted, the clock effectively starts. In cross-border deals, initial design—and the consistency with which you run that design—often makes the difference between a controlled process and a transaction that drifts into avoidable friction.
We can support LOI drafting and negotiations in cross-border M&A
At Syntax Partners, we support clients in Japan- and Asia-related cross-border M&A from LOI drafting through DD and SPA negotiations. We are cross-border focused, with most of our mandates involving transactions between Japanese companies and international counterparties across Asia. If you would like a review of LOI structure, guidance on how to position buyer credibility, or practical support in shaping negotiation assumptions, please feel free to reach out—even at an early stage.
We also support cross-border transactions end-to-end, not limited to the LOI phase. Depending on your needs, we can flexibly engage from initial assessment through strategy clarification, target sourcing and outreach, negotiation support, due diligence coordination, definitive documentation negotiations, and closing preparation. Our approach is to tailor the level and timing of involvement to the client’s situation, rather than forcing a rigid process template.