We generally include an Indication of Interest (IOI) in our sales process. This is not the same as an LOI – letter of intent - but is still an important part of the sales process. Here’s why.
An IOI is an informal proposal while an LOI is more definitive, and is the document that often is signed by buyer and seller to begin the final sales phase.
In our process, we use the IOI as a way to get to an LOI.
An indication of Interest (IOI) is a non-binding letter used to express interest in acquiring the business. The IOI will typically include a value range, due diligence plans, a high-level proposal for deal structure, and expectations for seller transition.
Most lower mid-market engagements go to market without a price, with the idea that buyer circumstances vary, and this will influence the price offered. It also injects a bit of competition. Consequently, the IOI is a good gut check to maximizing value.
In the past year, nearly all of our sell-side deals included multiple IOIs. That puts multiple parties in the process trying to win favor and get the deal. It is a gate to who gets invited to visit personally with our client and to take a walk around.
The IOI helps us know who has a value proposition in mind that would work in the transaction plan for our clients. When you have multiple buyers at the table, the IOI allows you to weed out the tire kickers and focus your energy on the buyers who value your business the most and offer deal components that are a good fit the exit goals.
Obviously, price is critical, along with when the money will be paid. But often there are other components in a proposal that can be interesting and enticing for the owner to consider, and sometimes these make the difference of who they want to go with.
In the IOI stage, owners refine the buyer list, compare terms, and get an understanding of buyer intent.
The next phase – the Letter of Intent – is when things get serious.
"The entire process went smoothly and professionally. The BTS team kept me fully informed at every step. They worked hard and were effective in bringing the deal home."
"Skip and I continue to be grateful for all you have done to make the sale of Pure Flow come to fruition."
"BTS’s level of expertise in the process and close attention to detail enabled us to successfully navigate the deal."
"These types of transactions are often long and complicated and I doubt it could have been successfully completed without your close ongoing involvement."
"The outside objective point of view that you have brought us has been invaluable as we prepare for the rapid growth."
"John then found the right buyer and coordinated a seamless transition—he doesn’t miss a single detail."
"John immediately identified our strengths and experiences and discussed a business that ultimately was more in line with our goals."
"The BTS team came in, evaluated everything in a professional and thankfully non-threatening manner."
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Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.
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Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.
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(T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.