Indication of Interest (IOI)
A preliminary, non-binding proposal from a buyer expressing interest and approximate valuation range, typically submitted before receiving detailed financials.
An Indication of Interest (IOI) is a preliminary, non-binding expression of interest from a potential buyer, typically submitted early in a sale process.
IOI vs. LOI
| Element | IOI | LOI |
|---|---|---|
| Timing | Early (after CIM) | Later (after meetings) |
| Binding | Non-binding | Mostly non-binding |
| Exclusivity | None | Usually requested |
| Valuation | Range | Specific price |
| Due diligence | None yet | Detailed plan |
What an IOI Contains
- Valuation range: $X-$Y million
- Structure overview: Asset vs. stock, financing
- Rationale: Why you're interested
- Qualifications: Ability to close
- Timeline: Expected process
When IOIs Are Used
- Competitive auction processes
- Larger transactions ($10M+)
- When seller wants to gauge market interest
- Before sharing detailed financials
IOI Best Practices
For Buyers:
- Be specific enough to stand out
- Don't lowball (may get excluded)
- Highlight competitive advantages
- Be responsive and professional
For Sellers:
- Use IOIs to create competition
- Don't over-weight highest number
- Consider certainty to close
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