4: Submit an Indication of Interest

Summary of Process

A) Submit an indication of interest (IOI)

B) We review and respond to your IOI

If you’re interested in the business after reviewing the CIM and financials, we may request that you submit an IOI before proceeding to the next steps of the process, which generally include a call with the seller. An IOI is a non-binding letter expressing your preliminary interest in a business and outlining a potential price range and key deal terms. If the price and terms you propose in your IOI are in the range of what the seller may accept, then we will grant a call with the seller or release additional requested information. In certain circumstances, we may request an indication of interest (IOI) prior to granting a call with the seller or upon releasing additional information.

A) Submit an Indication of Interest

We review your IOI to ensure your proposed valuation and terms align with the seller’s expectations and are competitive with other offers we may have received. If they align, we approve the IOI and move to the next step of the process, which generally includes arranging a call with the seller. Note that the seller doesn’t sign an IOI as it’s a preliminary indication of your proposed terms and isn’t a binding agreement.

Later in the process, an IOI is replaced by a letter of intent (LOI).

We may request an indication of interest (IOI) in the following scenarios:

• Arranging a Call: Prior to granting a first, or additional meeting(s) with the seller
• Providing Additional Information: Prior to sending you additional information on the business

You can download an editable IOI here.

If you do not use our IOI template and prefer to prepare your own IOI, we recommend including the following terms:

• Purchase Price: A purchase price range (e.g., $10.0 to $10.5 million)
• Funding: Your available funds and their sources (e.g., $5 million cash, $5 million bank financing, etc.)
• Financial Deal Structure: Your proposed financial deal structure (e.g., 60% cash, 30% seller financing, 10% earnout, etc.)
• Legal Deal Structure: Your proposed legal deal structure (e.g., asset purchase)
• Transition: A high-level outline of the seller’s role in the transition, including any compensation or proposed salary (e.g., 1 year @ $200k/year)
• Conditions: Any conditions to closing (e.g., financing, lease assignment, license approval, etc.)
• Timeline: Your proposed time frame to close from signing an LOI (e.g., 120 days)

If you’re an individual, search fund, or smaller company and obtaining third-party (e.g., bank or SBA) financing, please email us the following information:

• Resume or CV: Most lenders require 1 to 3 years of direct or related experience to the business you’re acquiring.
• Credit Report: The better your credit score, the easier it will be to obtain financing.
• Personal Financial Statement: Please also send a detailed personal financial statement showing your assets, liabilities, and net worth. We recommend using SBA’s Personal Financial Statement Form 413.
• Bank Statement: Please send a bank statement showing proof of the down payment. Note that SBA loans require a minimum 10% cash down payment.

B) We Review and Respond to Your IOI

After we receive your IOI, we’ll review it to determine whether your proposed valuation and terms align with our expectations. If your IOI is aligned, we’ll move forward to the next steps in the process, which may include arranging a call with the seller or providing additional information. If we don’t approve your IOI, we’ll let you know and offer you the ability to submit a revised IOI.

We Do Not Disclose Valuation Expectations

We do not disclose valuation expectations for the following reasons:

• Our goal is to secure the most attractive price and terms. The process is similar to a blind auction in which the bidders are not aware of what the other bidders have bid.
• We may receive new offers that are more competitive than an offer we recently received (and provided valuation guidance on).
• Purchase price alone doesn’t determine whether an offer is attractive—the deal structure plays a critical role. A highly favorable structure, such as a larger down payment or higher interest on a seller note, can justify a lower purchase price and vice versa. Other factors, including contingencies and financing terms, also influence the seller’s decision.
• The seller may not always have specific price or valuation expectations. 
• Non-financial factors, such as fit and upside potential for the seller, also influence the seller’s decision.

If we don’t accept your IOI, we don’t disclose our expectations. If you would like to submit an offer, we suggest submitting the best offer you can based on the information we have provided.

Frequently Asked Questions

Under what circumstances do you require an Indication of Interest (IOI)? The circumstances under which we require an IOI vary based on several factors, such as the stage of the sale process, the overall response we have received from buyers, the number of offers we have already received, and our preferred type of buyer and several other factors.

Can I receive copies of the seller’s tax returns if I submit an indication of interest? No, we only provide copies of the seller’s tax returns upon acceptance of the letter of intent, during the due diligence period.