Comparing IOIs Side by Side: How Software Changes the Offer Conversation

What an IOI actually contains, and why letters are hard to compare

An indication of interest is commonly a non-binding outline of a proposed transaction, although particular provisions can be binding and the definitive agreement controls the transaction. [1] ABA guidance on business combinations similarly distinguishes an often non-binding LOI or term sheet from a binding confidentiality agreement before significant discussions. [2] A sponsor's IOI typically states an enterprise value or a range, a purchase price basis such as cash-free, debt-free with a working capital target, the proposed structure, financing sources, key assumptions, diligence requirements, and a timeline. A strategic's IOI may look different, with a single number, less structure, and more conditions tied to integration or synergy. A family office IOI may emphasize the owner's continued role.

Six IOIs can arrive in six formats. One quotes a range, one a point estimate. One assumes a normalized working capital peg, another is silent. One includes a 20 percent rollover that is presented as part of the headline, another excludes it. The associate's first job is to translate each letter into the same set of fields so the MD can compare them at all.

That translation is where errors can happen. An earnout may be counted at face value in one column and treated as a contingent amount in another. A seller note may be added to cash in one row and listed separately in another. By the time the comparison reaches the owner, the headline numbers may not mean the same thing. The bank should retain a source reference for each field and resolve ambiguity before presenting the grid.

The standard grid: eight fields every IOI gets mapped to

A disciplined bank maps every IOI to the same fields before anyone compares anything. The fields are not complicated: headline enterprise value or midpoint of range; cash at close; seller financing, including amount and terms; earnout, including amount, metric, and period; rollover equity, including percentage and implied value; working capital assumption; financing status; and conditions and requested exclusivity.

Once every letter is in the same grid, the comparison becomes substantive. The sponsor at $32 million headline with $24 million cash at close, a $4 million earnout, and 15 percent rollover is a different offer from the strategic at $29 million all cash with no conditions beyond confirmatory diligence. Which is better depends on the owner's risk tolerance, timeline, and desire to stay involved. The grid makes the trade-off visible. The letters alone hide it.

Software can assist with the mapping because the fields are stable even when letters vary in format. The associate still confirms each extracted field against the letter. A useful comparison records the page or other source location for every figure, so the MD can test an unexpected number before it reaches the owner.

The owner conversation: from reading to deciding

The offer meeting with an owner is one of the highest-stakes conversations in a mandate. The owner has been waiting months for this moment. The managing director's job is to help the owner understand what is on the table and make a decision about which buyers advance.

When the comparison arrives as six PDFs and a hastily built spreadsheet, the meeting can be spent reading. The MD explains what an earnout is, why the rollover matters, and which buyer's financing is documented. The owner's attention is consumed by comprehension, leaving less room for judgment.

When the comparison arrives as a clean grid with a short narrative on each offer, the meeting can focus on deciding. The MD can say: "Three of these are real. The strategic is the cleanest cash. The two sponsors are higher on paper but a third of that is contingent. Here is what I think each one will do in diligence." The owner asks the questions that matter: what happens to my people, how long until close, and what if the earnout metric is missed.

That is the shift. The grid is not the analysis. It is the artifact that can let the analysis happen in the meeting instead of being crowded out by explanation.

Second-round strategy comes from the comparison, not from the headline

The IOI comparison also informs who advances and what the bank asks of them. A bank that ranks offers only by headline value risks advancing a buyer with a more conditional structure while overlooking a lower headline offer with cleaner cash and fewer conditions. The grid does not decide for the MD or owner. It makes the trade-offs explicit.

A side-by-side grid gives the second-round invitation list a reasoned basis. The MD can advance five buyers, send each a specific message about what would improve its position, such as more cash at close, a shorter exclusivity period, or evidence of committed financing, and track the responses against the same grid. When the LOIs come in, the comparison can be updated, and the bank can see which buyers moved and which did not. The bank makes every contact and decision.

For a boutique bank running several mandates at once, a common grid can make the comparison a reusable artifact rather than a bespoke exercise. The associate learns the fields once, and the MD reads the same layout each time. The time benefit is a workflow hypothesis to measure against the bank's own baseline, not a guaranteed result.

What to do this week

Find the IOI comparison from the bank's last process. Check two things. First, did every column mean the same thing for every buyer: was cash at close defined identically, and was the earnout treated consistently? Second, how many hours did the associate spend building it? Do not assume a day or more is typical. Record the actual time, the number of rework cycles, and the source checks required.

Then write down the eight fields the bank will map every future IOI to, define each field in one sentence, and use that list on the next mandate regardless of what software the bank is using. Add a source-location column and a reviewer column. That small control makes it easier for the MD to challenge a figure and for the associate to correct the grid before the owner meeting.

How Acquivo Pro fits

Acquivo Pro manages NDA, IOI, and LOI flow for every client in a single pipeline on one login. The bank can use the same pipeline to keep buyer offers, NDA status, and data room access together. Acquivo Pro also generates teasers and CIMs from the client questionnaire and data room, and its valuation engine is deterministic, meaning the same inputs produce the same output and figures trace to their source. The bank decides which offers advance, what to ask of each buyer, and what to tell the owner. To see it on a live mandate, request a demo through the Contact page.