Do people use IoI's? If so, how?

by a searcher from Carnegie Mellon University - Tepper School of Business

4 years ago

I'm a self funded searcher and I have read that Indications of Intent are an important component of progressing into serious talks with sellers, most notably from Jim Sharpe's posts and the HBR Guide to Buying a Small Business. But I've spoken with small business lawyers who have never heard of an IoI. Given such a drastic difference, I thought I'd ask the community for their thoughts on the benefits of using an IoI and their importance in progressing a deal.

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searcher from Northern Alberta Institute of Technology

In Canada, there's been a move from Letter of Intent (to Purchase) ie, LOI, to Indication of Interest (to Purhcase), IOI, as apparently there's less risk from a legal reps and warranties perspective. It's less risky to issue an IOI than an LOI. But it's definitely convention to agree on the terms of purchase with an IOI , at least at a high level, before proceeding with further negotiations and lengthy due diligence , which could just end up costing everyone a lot of time and money for the deal to potentially fall apart.

3 months ago | like reply | 0 likes

professional from North Central College

It depends on the if there is a process, or if it is more informal. I tend to use an IOI to make sure the proposed LOI range is within expectations before I have my team spending time working through a comprehensive LOI

3 months ago | like reply | 0 likes

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