Indication of Interest (IOI)
Preliminary, non-binding expression by a prospective buyer of their interest in acquiring a business, accompanied by a price range and general terms.
Definition
An indication of interest (IOI) is a non-binding document submitted by a prospective buyer early in the sale process. It formally expresses the buyer’s interest and typically proposes a preliminary price range, a contemplated transaction structure, and the main conditions.
In French-language Quebec documentation, you’ll see indication d’intérêt (IOI) used for the same concept.
The IOI sits between the first contact and the letter of intent (LOI). It’s submitted after the buyer has learned about the opportunity through an anonymous initial approach and signed an NDA to access the confidential information memorandum (CIM), but before they’ve analyzed the business’s detailed financial information.
Why the indication of interest matters in a business sale
For the seller, IOIs are an essential sorting tool. When several buyers express interest, IOIs let you objectively compare proposals without having revealed sensitive confidential information yet. You can assess not just the proposed price but also the buyer’s profile, their financial capacity, and the structure they contemplate.
In a well-structured sale process — especially in the Quebec SME market — the broker solicits several IOIs in parallel to create a competitive environment. That dynamic pushes buyers to present their best terms up front. A seller who receives three or four serious IOIs is in a much stronger negotiating position than one who only has a single offer.
The IOI also filters out unserious or underfunded buyers before giving them access to the virtual data room. Sharing your detailed financial information with a buyer who has neither the intent nor the means to close is an unnecessary confidentiality risk.
What every seller should know
- The IOI is non-binding — neither you nor the buyer is committed. It validates mutual interest before either side invests time and resources in due diligence.
- A price range in an IOI isn’t a firm offer. Expect the price to be refined (up or down) in the letter of intent, after the buyer has analyzed your financial data.
- Ask your broker to solicit at least three to five IOIs before selecting the buyers who move to the next stage — competition among buyers is your strongest lever.
- Evaluate each IOI beyond price: financing capacity, sector experience, and proposed timeline matter just as much for getting the transaction to close.