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Regardless of whether your investors' intentions are honorable, you can make sure their letter of intent is.
When you finally hear the magic words "We want toinvest," temper your enthusiasm just a bit. That means nothingcoming from an investor's mouth until you successfullynegotiate the letter of intent.
The letter of intent, or LOI, is the first official document youreceive from an investor after the handshakes are over and the realwork on the deal begins. Though 99 percent of LOIs are not binding,don't underestimate the document's importance, says JayMcEntee, an attorney and venture capitalist with Harron Capital, aprivate venture capital firm located in Frazer, Pennsylvania."The letter of intent will serve as the blueprint of the dealand moves negotiations from an indication of interest to theclosing table," says McEntee.
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