IOI (Indication of Interest)

What Is an IOI?

An indication of interest (IOI) is a formal but non-binding letter submitted by a prospective buyer to a sell-side advisor during a structured M&A process (Corporate Finance Institute). It communicates the buyer’s preliminary interest in pursuing an acquisition, along with a proposed valuation range and high-level transaction terms (Investopedia).

The IOI typically arrives after the buyer has reviewed a teaser and a confidential information memorandum (CIM) but before conducting detailed due diligence. It serves as a screening mechanism — allowing the sell-side advisor to narrow a broad pool of interested parties down to a shortlist of serious bidders.

When an IOI Is Submitted

In a typical sell-side process, the IOI falls in the first round of bidding:

1. Marketing phase — the advisor distributes teasers and NDAs to a broad buyer universe (for the full timeline, see the sell-side M&A process)
2. CIM distribution — signed NDA holders receive the confidential information memorandum
3. First-round bids (IOI) — buyers submit IOIs based on their review of the CIM and any preliminary Q&A
4. Shortlisting — the advisor selects a subset of bidders to advance to the next round
5. Due diligence and management presentations — shortlisted parties conduct detailed analysis
6. Final bids (LOI) — remaining bidders submit binding or near-binding letters of intent

What an IOI Contains

A well-drafted IOI typically includes:

• Proposed valuation range — expressed as an enterprise value range (e.g., $120M–$140M) or a multiple range (e.g., 8–9x EBITDA)
• Transaction structure — asset purchase vs. share purchase, any proposed rollover equity or earnout components
• Financing plan — how the buyer intends to fund the acquisition (cash on hand, committed debt, equity raise)
• Due diligence requirements — key areas the buyer needs to investigate before submitting a final bid
• Timeline — estimated time to complete diligence and reach a definitive agreement
• Key conditions — any material assumptions or contingencies

IOI vs. LOI

The IOI and letter of intent (LOI) serve different purposes at different stages:

	IOI	LOI
Binding?	Non-binding	Partially binding (exclusivity, confidentiality)
Stage	First round	Final round
Valuation	Range	Specific price
Due diligence	Not yet conducted	Substantially complete
Exclusivity	Not requested	Typically granted
Detail level	High-level terms	Detailed terms sheet

Strategic Considerations for Buyers

Submitting an IOI requires balancing competitiveness with discipline:

• Valuation range width — too narrow signals inflexibility; too wide signals uncertainty or lack of conviction
• Premium positioning — being at the top of the range improves shortlisting odds but sets expectations
• Credibility of financing — demonstrating committed funding (vs. “subject to financing”) strengthens the bid
• Speed and certainty — emphasising a clear path to closing can differentiate a buyer from higher-priced but riskier alternatives

IOIs in Asia Pacific

For a complete walkthrough of each deal stage, see our M&A process guide. In Asia Pacific M&A processes, IOI conventions can vary by market. Australian and Japanese processes closely mirror Western norms, while in Southeast Asia, processes may be less structured and the line between IOI and LOI can blur. Cross-border bidders must navigate different expectations around valuation presentation, currency denomination, and regulatory approval timelines. AI-powered deal platforms like Amafi help advisors manage multi-jurisdictional processes and evaluate buyer credibility across the region.