Thoughts on a Indication of Interest (IOI)

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February 08, 2024

by a searcher from Iowa State University of Science and Technology in Chicago, IL, USA

I am speaking with a seller that his company does around 80 million in revenue. I have not used a indication of interest (IOI) document before, is it worth reaching out to my law firm for that form or does any template suffice? If anyone does have a template that I am able to use that would be great!

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Reply by a searcher
from Harvard University in Colorado Springs, CO, USA
An IOI can be as little as an email with a proposed purchase price and some basic terms. It's not a legally binding document in any way.
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Reply by an intermediary
from The University of Michigan in Bonita Springs, FL, USA
Given the letter is an informal, non-binding initiation of your interest in completing a deal, I would spend more time on the softer side. Too many letters of interest are too fast into the "what" and miss out on the relationship building why's. Beyond the proposed deal structure, I would make sure to answer other questions a seller is going to have:

Who are you? Introduce yourself or your company, background, skills, etc. Discuss your experience or expertise that makes you the right partner.

Why you? Explain why you are interested in acquiring the target business. Explain what you are bringing to the table, e.g., synergies, new markets, new geography, growth strategies, operational improvements, etc..

What are you looking to do? Explain whether you are looking for a full or a partial recap, a spinout of specific assets, etc..

Where is the money coming from? Explain how you plan to finance the acquisition.

What are the next steps? Layout your proposed next steps and thank them for their time and consideration.
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