Process Letter

What Is a Process Letter?

A process letter — also called a bid procedures letter or sale process letter — is a formal communication sent by a sell-side adviser to shortlisted buyers during a competitive auction process. It marks the transition from the preliminary round (where buyers submit indications of interest) to the formal bid stage (where buyers submit binding or near-binding offers).

The process letter sets out everything a buyer needs to submit a compliant, competitive bid: the deadline, the required documents, the form of offer, what due diligence access will be provided, and how the seller and adviser intend to evaluate competing bids.

What a Process Letter Contains

A well-drafted process letter typically includes:

Bid deadline and timeline. The date and time by which final bids must be received, and key milestones leading up to that date — management presentation dates, data room access window, deadline for questions, and expected signing timeline.

Required bid components. What the buyer must submit to be considered. For a binding offer this typically includes:

• A signed letter of intent or offer letter with price and key terms
• A marked-up share purchase agreement (or asset purchase agreement)
• Evidence of financing capacity or funding arrangements
• A confirmatory due diligence checklist or outstanding conditions list
• Identification of regulatory approvals required, with indicative timeline

Offer format. Whether the bid should be an unconditional binding offer, a near-binding offer subject only to limited conditions, or a detailed indicative offer with a clear path to binding commitment.

Due diligence access. The scope of data room access provided to shortlisted buyers, the window for management presentations, and the process for submitting questions to management or advisers.

Evaluation criteria. The factors the seller will use to assess competing bids — typically price, certainty and conditionality, deal structure, regulatory risk, timeline to completion, and the buyer’s approach to management and employees.

Exclusivity terms. Whether the seller intends to grant exclusivity to the preferred bidder, and on what terms.

Non-disclosure requirements. Confirmation that the NDA executed at the start of the process remains in effect, and any additional confidentiality requirements specific to the final round.

Process Letter vs Other Auction Documents

Document	Timing	Purpose
Teaser	Phase 1	Anonymous summary to generate initial interest
CIM	After NDA signed	Detailed business profile for qualified buyers
IOI / preliminary bid	Phase 1 close	Buyer’s non-binding valuation and terms indication
Process letter	Phase 2 open	Formal bid procedures and requirements
Final binding offer	Phase 2 close	Buyer’s committed offer price and terms
LOI / exclusivity letter	Post-selection	Agreement with preferred bidder to negotiate exclusively

Why the Process Letter Matters

For sellers. The process letter is one of the most powerful tools the sell-side adviser has to maintain competitive tension in the final round. By setting a clear deadline, requiring equivalent documentation from all bidders, and signalling that the seller will select a preferred buyer based on stated criteria, the letter creates urgency and prevents buyers from drawing out negotiations.

For buyers. A well-structured process letter is a signal of how the deal will be run. Buyers who understand it well use it to assess how competitive the field is, what the seller prioritises, and where flexibility exists in the process. A buyer who responds incompletely or late to a process letter effectively removes themselves from consideration.

For advisers. The process letter represents the culmination of the preparation phase and the launch of the most commercially sensitive stage of the deal. Getting the requirements right — not too onerous (which will reduce the number of credible bids), not too loose (which will make bid comparisons difficult) — requires experience and judgment about the specific deal.

Negotiating Process Letter Terms

Buyers may seek modifications to a process letter before submitting a final bid. Common requests include:

• Extended timeline — more time for due diligence or financing arrangements
• Reduced documentation — requesting to submit a LOI without a marked-up SPA at the bid stage
• Clarification on conditionality — what conditions (regulatory approvals, financing) the seller will accept in a binding offer
• Management access — additional meetings or Q&A sessions before submitting a final bid

Sellers and advisers evaluate these requests against their desire to maintain competitive tension. Granting timeline extensions can reduce the competitive pressure that drives price. But an inflexible process that deters serious bidders can achieve the opposite effect.

Process Letters in APAC

In Asia Pacific, process letters for cross-border transactions often include additional provisions:

• Regulatory conditions — explicitly addressing which foreign investment review approvals (FIRB, MOFCOM, FEFTA, etc.) will be treated as conditions precedent and how the risk of non-approval is allocated
• Governing law and language — the language in which the offer must be submitted and the jurisdiction for dispute resolution
• Shareholder and board approval requirements — particularly for corporate acquirers whose own governance requires internal approval before a binding offer can be submitted

For a full walkthrough of how competitive auction processes work, see Auction Process.