• Jason Kraynak

What to know about Indications of Interest

During every deal process, there is a point where discussions between a potential buyer and seller need to advance past an exploratory and initial information-gathering phase. At this time, the seller has provided ample information to potential buyers and needs to understand which buyers have emerged as the favorites to close a deal that will fulfill the seller’s goals. Indications of Interest (IOIs) move the deal process forward and separate the “real” buyers from the pretenders.


Sometimes called Expressions of Interest (EOI), IOIs are formal but non-binding letters prepared by buyers that express interest in making a purchase. These documents help sellers narrow the field and avoid wasting time on buyers who are just “window shopping” and are not seriously interested in pursuing a deal. Upon receipt of an IOI, a seller is able to assess not only a buyer’s willingness but also their ability to pursue a transaction.


The goal of the IOI is to inform the seller on which buyers they should be dedicating resources towards. Unlike the more well-known Letter of Intent (LOI), which comes later in the process after further buyer diligence, the IOI usually does not provide a buyer with an exclusivity period for negotiations.


What is included in an IOI?


IOIs are completed with limited information and often before prospective buyers have visited or conducted substantial due diligence. They often include:

  • Valuation: Can be provided as a dollar range or a multiple of EBITDA.

  • Proposed structure: Details the buyer’s plans to allocate the purchase price (cash at close, contingent payments, earnouts, etc.).

  • Funding Sources: Details the buyer’s plans in financing the purchase price. Describes the type/source of funds (how much debt will be used vs. equity, etc.).

  • List of due diligence items that will be needed from the seller: Related to finance, legal, human resources, customer contracts, and more.

  • Rough timeline: Gives the seller an idea of how long it will take to proceed through due diligence and close the transaction.

  • Proposed role of senior management post-transaction: Considers overlapping management roles and how those may be handled.

  • Approvals required: Details the process for sign-off from the Board of Directors.

  • Transition and support services: Outlines a buyer’s potential need for transition support.

  • Transaction expenses: Details how transaction expenses incurred—due diligence, legal documents—would be paid for.

In evaluating IOIs, a seller should consider the value to shareholders, the buyer’s ability to finance a transaction, the proposed timeline, and integration and post-closing strategies, among other factors.


Experienced deal advisors will help a buyer construct IOIs with relevant information, setting the stage for a transparent process and a successful deal. Conversely, sell-side advisors are able to help evaluate IOIs upon receipt, leveraging industry knowledge, and comparables to select only the most promising deal partners to enter advanced stages of negotiations.


IOIs are just one step in a deal process, but their importance cannot be overstated.


Jason Kraynak is Vice President at Copper Run. He focuses on assisting families and privately held business clients in their growth through acquisitions and in meeting their liquidity objectives.


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