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A letter of intent is a document written by one company and sent to another indicating a desire and ability to do business. The issuance of a letter of intent often precedes formal negotiations of a merger or acquisition and can potentially impact the share price of both the letter of intent issuer and recipient. Although a letter of intent is not a contract or legally binding, sending a letter of intent generally indicates serious interest. Companies issuing a letter of intent typically disclose this information in a Form 8-K filing with the SEC. Investors contemplating a large investment in a managed fund they plan to make in increments may send a letter of intent in advance of the purchase to qualify for a reduced sales charge. |
