An Indication of Interest (IOI) is a preliminary, typically non-binding document stating a party’s interest in acquiring or investing in a company, with indicative pricing and structure.

How it works

In sell-side M&A, advisors distribute a confidential information memorandum to potential buyers. Interested parties submit IOIs with valuation ranges, proposed deal structure (cash vs stock, earnout), financing sources, and diligence requirements. The seller selects a short list for deeper access and management meetings. IOIs are not binding offers — buyers can walk away after diligence. In growth equity or secondary processes, IOIs play a similar filtering role before binding term sheets. Quality IOIs show serious underwriting: specific rationale, identified financing, and realistic timelines. Weak IOIs with wide price ranges or vague conditions waste seller time.

Why it matters

• Founders: IOIs set the competitive landscape early in a sale process. Compare not just headline price but certainty, structure, and buyer reputation.
• Investors: Submitting IOIs consumes bandwidth; firms prioritize deals where IOI can convert to exclusivity and closed transaction.

Common mistake

Treating an IOI as a done deal or locking into exclusivity with the highest IOI without validating financing and diligence path.

Related ideas

Letter of intent, term sheet, exclusivity, and hot round dynamics mirror IOI stages in different contexts.