It is not unusual for negotiated acquisitions to begin with (or include) the negotiation of a letter of intent, which can also be known as a memorandum of understanding or heads/terms of agreement. The letter of intent is a useful outline of the transaction and may also serve to accomplish the following (among other things):

• Quickly agree key terms of any potential transaction
• Prevent a seller from negotiating with other parties
• Allow relevant governmental approval processes to begin within an agreed framework
• Facilitate fundraising for the transaction
• Define a buyer's inspection and due diligence rights
• Provide for the treatment of confidential and proprietary information
• Establish a schedule for completing all matters necessary to close the transaction.

The letter of intent may be expressed to be binding or nonbinding, either wholly or in part. Unless drafted carefully, a court may decide that the document is not binding, even if it states that it is intended to be binding.

• Exclusivity: It is common to include binding exclusivity provisions in the letter of intent or term sheet, even if the entire letter itself is not binding.
• Break fee: Break fees are not particularly common in private M&A transactions. However, if they are seen, it would be for larger or competitive bid transactions. Break fees are more commonly used for public M&A transactions.
• Confidentiality: It is common to include binding confidentiality provisions in the letter of intent or term sheet, even if the entire letter itself is not binding.

Confidentiality agreements and exclusivity agreements are often negotiated as separate agreements in private M&A transactions.

Separate confidentiality agreements are commonly entered into, particularly where the seller is providing the buyer with due diligence information.

Separate exclusivity agreements are not as common as confidentiality agreements, as exclusivity provisions are often included in confidentiality agreements as well as letters of intent.

In Australia, there is no general obligation to act in good faith. There is some uncertainty under Australian contract law about the circumstances in which an obligation to use good faith when entering and performing a contract will be implied. For example, several cases have held there to be an implied obligation to use good faith when exercising a right to terminate for breach. However, it is not settled under Australian law that an obligation to use good faith when entering and performing a contract will always be implied. The most common remedy is financial damages to compensate a party for its loss and put it in a position as if the contract had been performed. Damages are the most commonly pursued remedy and may be awarded by a court or any other adjudicator.