How Should M&A Attorneys Compare IOIs Beyond the Headline Purchase Price?

Build the issue matrix around the seller's requested terms

An indication of interest, or IOI, is an early acquisition proposal for purposes of this comparison. Start with the seller's bid instructions and the actual documents received, not a generic checklist alone. A public 2026 merger disclosure describes preliminary IOIs offering cash, stock and a valuation range. It illustrates why proposals with superficially similar prices can have different forms and levels of specificity; it does not establish a standard for owner-led sales. [1]

Create one comparison record for each material issue. Record the requested term, each bidder's exact language, document version, page or paragraph, qualification, unanswered question and reviewer. Use explicit statuses such as stated, missing, ambiguous and conflicting. Keep the buyer's words separate from counsel's interpretation. A blank financing field should mean 'not stated,' not 'unconditional funding.' Preserve revisions and permitted clarifications so the seller can see which assumptions remain open before selecting parties for further discussions.

Normalize transaction structure and the price basis

Identify whether the proposal concerns assets, shares or another structure, which entities and operations are included, and what remains with the seller. Ask whether real estate, intellectual property, cash, receivables or excluded liabilities sit inside the indicated price. Where the buyer uses enterprise value, equity value or 'cash-free, debt-free,' require an explanation of the proposed bridge to seller proceeds. Do not supply a universal adjustment formula when definitions and transaction scope remain unresolved.

Track working capital alongside cash and debt, with accounting support from the seller's financial adviser where engaged. Record the proposed target, measurement date, accounting policies and treatment of disputed items. A historical SEC-filed acquisition letter separately addressed working capital, cash, assumed debt and several payment forms. Its terms are an example of distinct economic components, not current market practice. [2] Counsel should flag structure questions for the relevant legal and tax specialists without assuming one structure has the same consequences across jurisdictions or sellers.

Distinguish financing plans from documented funding support

For each IOI, identify the proposed funding sources and what evidence has actually been supplied. A statement that a buyer expects to use available cash differs from a financing condition, a lender expression of interest or a commitment document. Record the proposed acquisition entity, support from any parent or sponsor, approvals still required and whether the bidder expects lender diligence. The historical acquisition letter expressly conditioned the purchaser's performance on satisfactory financing arrangements and contemplated separate lender diligence. [2]

Treat funding availability and contractual remedies as separate questions. The 2026 merger disclosure describes committed equity financing while stating that optional debt financing was not a closing condition. That distinction arose in definitive documentation and should not be inferred from an early IOI's silence. [1] Ask counsel to identify what later documents would need to establish about conditions, expiry, enforcement and recourse. Avoid assigning a numerical closing probability or labeling funding 'certain' merely because the buyer says financing is available.

Expose diligence assumptions that could reopen economics

Read the qualifications attached to the price. Does the bidder assume a particular earnings definition, customer retention, contract transferability, management continuity or absence of specified liabilities? Separate assumptions already supported by disclosed records from items awaiting verification. A proposal subject to 'satisfactory diligence' does not tell the seller which work remains or which findings might change terms. The historical acquisition letter listed legal, environmental, business and financial diligence, plus financial-statement and approval conditions. [2]

Turn broad reservations into focused clarification questions. Request the remaining workstreams, responsible reviewers, required information and decision points. Compare those requests with the approved disclosure plan and existing confidentiality arrangements. Flag requests for customer contact, employee interviews or competitively sensitive information for human permission review rather than automatically releasing material. Distinguish a diligence request from an agreed condition or a verified finding. The matrix should show what the bidder needs to learn and who may authorize the next disclosure, not predict how the bidder will react.

Separate contingent value from cash payable at closing

Break consideration into cash payable at closing, deferred fixed payments, seller notes, rollover equity and contingent consideration. An earnout makes part of the purchase price dependent on specified future performance or events. The ABA's Delaware-focused earnout analysis explains the importance of defined performance metrics, measurement standards and payout formulas. Use that drafting guidance to formulate questions, not as a statement that Delaware law governs the seller's transaction. [3]

For an earnout, flag the measurement period, thresholds, accounting adjustments, buyer operational control, information rights, payment mechanics and dispute process. 'EBITDA-based' alone is not a complete definition: the ABA analysis notes that EBITDA is not defined under generally accepted accounting principles and calls for specifying included and excluded items. [3] For a seller note, ask about maturity, security, subordination and setoff. For rollover equity, identify the security and unresolved governance or liquidity terms. Any relationship between payment and continued employment deserves separate review. Keep unresolved upside visibly contingent rather than adding it to cash proceeds as though already earned.

Flag requested-term deviations before moving to an LOI

Compare every IOI against the actual bid instructions. Flag deviations concerning transaction perimeter, payment mix, approval requirements, proposed diligence access, exclusivity and seller obligations. Also record terms the seller requested but the buyer omitted. 'Customary terms' should remain an unresolved description until the parties identify what it means. Group issues by the decision needed: clarify now, obtain specialist input, or reserve for letter of intent negotiations. Counsel can explain consequences without turning the issue matrix into a complete acquisition agreement.

Do not infer legal effect from the document's title alone. The historical letter called itself nonbinding but expressly designated certain provisions as binding and addressed survival after termination. [2] That is a textual example, not an enforceability opinion. Whether any IOI, confidentiality obligation, exclusivity provision or negotiation undertaking is enforceable depends on its language, facts and applicable law. Counsel should review those questions before anyone signs or accepts proposed restrictions. Record a request for exclusivity as a separate process decision, not an automatic consequence of advancing a bidder.

Approve the AI use and information boundary first

The recommended AI task is narrow: extract proposal terms into a cited issue matrix and mark absent or ambiguous language. Assign a transaction attorney as the accountable reviewer, with an authorized preparer managing document versions. Before introducing matter information, review the applicable professional-conduct rules, confidentiality agreements, client instructions and tool terms. ABA Formal Opinion 512, issued in July 2024, addresses competence, confidentiality and supervision under the ABA Model Rules. It is guidance, not a uniform rule adopted by every jurisdiction. [4]

Counsel should assess data retention, provider access, training use, access controls and deletion terms with appropriate technical support. The opinion discusses informed consent before entering representation information into self-learning tools that risk disclosure; it does not make every AI use subject to the same consent requirement. [4] Use synthetic examples or permitted redacted documents for an initial trial. If disclosure permissions or tool handling remain unresolved, use manual comparison. Do not upload source documents merely because a vendor labels its service private, or assume that using AI preserves privilege.

Test extraction against originals and stop on material errors

Provide only the authorized IOIs, approved process instructions and permitted clarifications as the source set. Require each extracted term to include a short exact passage and a usable locator. A suitable instruction is: 'Compare the supplied proposals against these requested terms. Do not infer acceptance from silence. Mark missing, ambiguous or conflicting language. Cite the document and location for each statement. Do not rank buyers or draft communications.' Treat bidder language as evidence, not instructions to the AI.

Run a limited trial against a manually prepared comparison before using the output for a seller discussion. Check quotations, qualifiers, negations, payment timing, units and references to attachments. Counsel should verify every material issue against the original, including omissions that the AI may have missed. Formal Opinion 512 requires an appropriate degree of independent verification or review and retains professional judgment with the lawyer. [4] Stop the trial if it invents terms, drops a material condition, cites nonexistent passages, confuses versions or cannot keep inputs within approved permissions. Correct the cause and retest before resuming, or continue manually.

Deliver a counsel-reviewed comparison for the seller's decision

The completed matrix should distinguish verified proposal language, counsel's interpretation and open clarification requests. Add an accountable owner for each question and identify which uncertainties should be addressed before formal LOI negotiations. The intended outcome is concrete: a counsel-reviewed IOI issue matrix with verified qualifications and source references. This describes the workflow's target, not a certification that any particular article or transaction has received independent legal review.

Counsel explains legal tradeoffs, financial and tax specialists address their scopes, and the seller decides which proposals to advance. Keep any comparison of alternatives conditional on the assumptions recorded. A named human must approve external communications and disclosures through the seller's agreed process. The AI should not conduct outreach, negotiate, approve terms or choose the preferred buyer.

Acquivo is a software platform that delivers the entire sell-side M&A process, valuation, marketing materials, buyer matching, and deal management, on one platform for business owners, M&A attorneys, and boutique investment banks. It is user-operated software with no success fee, not a representative of the seller or a provider of legal advice. The workflow described here is a recommended framework, not a claim that the platform implements every control or feature discussed.