Mergers & Acquisitions For Dummies

Chapter 9

Properly Expressing Interest in Doing a Deal

IN THIS CHAPTER

Delving into the indication of interest

Going steady with exclusivity

The indication of interest (also known as the indication or IOI) is a key landmark in any business sale. This document provided by the Buyer suggests a valuation range that he is willing to pay for a company. Typically, a Seller receives indications from numerous Buyers. If the Buyer’s indication is acceptable, the next step is for her to attend a management meeting (see Chapter 10) and submit a letter of intent (LOI — see Chapter 13).

Think of the indication as akin to a father asking his daughter’s date, “What are your intentions with my daughter, young man?” The indication provides an overview of Buyer’s intentions and sets the stage for what the final deal will (well, may) look like.

An indication may sound like a teaser (which I cover in Chapter 7), and in some ways it is. A teaser is compiled by a Seller (or a Seller’s intermediary); an indication of interest is created by the Buyer. Essentially, the indication is the Buyer’s teaser. The teaser is document (often anonymous) that explains the basics of the company for sale: products, ...