IOI stands for indication of interest, and in a sale process it is the first moment a buyer puts a number on paper. It is non-binding, usually expressed as a range rather than a figure, and it is the document that turns a long list of interested parties into a short list worth spending management time on. Understanding what it does and does not commit anybody to is most of what a first-time seller needs. This page sets out what an IOI contains and how it differs from the LOI that follows.
What an IOI contains
A valuation range, the form of consideration, an outline of how the buyer would fund it, what approvals they would need, and an indication of timing. It is deliberately short. Its purpose is to let the seller rank interest without either side spending on lawyers, and a buyer who insists on precision at this stage is usually signalling something about their process rather than their conviction.
How it differs from an LOI
Three ways. An IOI is a range and an LOI is a number. An IOI is one of several and an LOI is usually exclusive. And an IOI carries no exclusivity clock, which is the difference that actually matters: signing an LOI means agreeing not to talk to anyone else for thirty to ninety days, and that is a real concession.
What the seller does with them
Ranks them on more than price. A slightly lower number from a buyer with committed funding and no regulatory approval to obtain is frequently worth more than a higher one that depends on a financing that has not been raised. The IOI stage is where those distinctions are cheap to make and later stages are where they become expensive.
What happens next
The short list goes to management meetings, then to a second round, then to one LOI. Recording each buyer's IOI, its range and its conditions against the mandate is what makes the second round manageable, because by then the differences between five parties are detailed enough that nobody remembers them accurately.
Questions people ask about what is an ioi
Is an IOI binding?
No. It is a non-binding range with conditions, designed so the seller can rank interest before anybody spends on lawyers.
What is the difference between an IOI and an LOI?
A range against a number, one of several against usually exclusive, and no exclusivity clock against thirty to ninety days of one.
Should the highest IOI always win?
No. Certainty of funding and the absence of approvals to obtain are frequently worth more than a higher range.