Non binding indications of interest
M&A / Merger ModelThe first round submission: a price range with no commitment, used to select who proceeds.
Also written: IOI, indicative offer, non binding offer
An indication of interest states what a bidder thinks the business is worth on the information available, usually as a range rather than a point, along with key assumptions and the conditions attached.
It binds nobody. A bidder can revise or withdraw, and the seller can ignore the highest number entirely if the bidder looks unable to deliver, which is why the accompanying detail matters as much as the price.
Reading them well means reading past the headline. A wide range signals uncertainty; heavy conditionality signals a bidder that has not yet done the work; an aggressive number from a party without committed funding may be an option to look rather than a real offer.
The gap between first round indications and final binding offers is itself informative: bids that fall sharply after diligence usually mean the data room did not support the CIM case.
Worked example
An IOI states 300 to 330 enterprise value, cash free debt free, subject to confirmatory diligence and financing.
The width signals uncertainty and the conditions signal how much work is still to do. A bidder quoting a single point with few conditions has done more homework.
Bids that fall sharply between the indication and the binding offer usually mean the data room did not support the CIM case.