Why a well-drafted LOI is critical in Belgian M&A: protecting your deal from the start

In M&A, the Letter of Intent (LOI) is often treated as a formality. It is not. The LOI is the first real stress test of the deal. If it is vague or poorly drafted, you are gambling with millions. At dups, we see the LOI as a strategic asset, not paperwork. Here is why it matters, what it should include, and how to avoid costly mistakes.

What is an LOI and why does it matter?

In Belgian M&A, the Letter of Intent (LOI) is a critical document that frames the main commercial terms and sets the process for the transaction. It is not just a formality or a courtesy. The LOI is where leverage is won or lost: it defines the tone, scope, and timeline for due diligence and negotiations.

• For buyers, a strong LOI must be clear, credible, and attractive enough to be selected by the seller, especially in competitive processes where several offers may be on the table.
• For sellers, the LOI is the first round of acceptation: it signals which buyer is serious, well-prepared, and likely to close.

A strong LOI reduces uncertainty, accelerates closing, and protects your negotiating position.

A weak LOI creates loopholes that can be exploited later, leading to delays, renegotiations, or even deal failure.

The risks of a weak LOI

A poorly structured LOI sets the stage for problems later:

• Price drift: Buyers renegotiate because key assumptions were never locked in.
• Timeline creep: Without clear milestones, diligence drags and momentum dies.
• Exclusivity traps: Sellers lose leverage when exclusivity terms are too broad or too long.
• Hidden conditions: Ambiguous precedent clauses give buyers an easy exit.

Every one of these risks costs time, credibility, and often millions. In Belgium, where investor caution and legal complexity are the norm, these mistakes are magnified.

Key components of a strong LOI

A well-drafted LOI should cover:

• Price and structure: Fixed price, earn-outs, or hybrid models.
• Payment terms: Timing and conditions for each tranche.
• Exclusivity: Duration and scope, with clear limits to protect leverage.
• Conditions precedent: Regulatory approvals, financing, and due diligence requirements.
• Timeline: Milestones for diligence and signing.
• Binding clauses: Confidentiality, exclusivity, and governing law.

Clarity here avoids disputes later.

A well-drafted LOI achieves two critical goals:

• Protects your negotiating power by defining non-negotiables early.
• Signals professionalism to the buyer, which often translates into smoother diligence and fewer surprises.

Impact on later stages

The LOI sets the tone for everything that follows: due diligence, warranties, closing. If it is vague, expect:

• Endless renegotiations during diligence.
• Buyers pushing for broader warranties and indemnities.
• Delays that erode momentum and value.

Conversely, a strong LOI accelerates diligence, reduces friction, and signals professionalism. Buyers respect entrepreneurs who run a disciplined process.

The dups approach

At dups the financial and the legal work sit in one team, so whoever builds the numbers negotiates the clause that depends on them. We take a limited number of full mandates a year, from strategy to closing, chosen by an investment committee. Specialist Support covers one piece instead.

On the documentation it is usually the price mechanism, the warranty limitations and the closing sequence.