Indication of interest
An indication of interest is a short, non-binding written statement a prospective buyer submits after reviewing a teaser or confidential information memorandum, outlining a preliminary price range, proposed structure and next steps before making a full offer. It is less detailed and less committed than a letter of intent, and creates no binding obligation on either side.
Before a buyer commits real time to due diligence, and before a seller grants exclusivity, both sides often want a quick signal of whether a deal is even in the right range. An indication of interest fills that gap: a short document, sometimes just a page, stating an approximate valuation range, how the buyer would want to structure and finance the purchase, and what information they would need next.
How it differs from a letter of intent
A letter of intent usually follows deeper review and includes more specific terms, sometimes an exclusivity period and a target closing date. An indication of interest is earlier and looser, more a statement of serious preliminary interest than a negotiated set of terms. Neither is typically legally binding on price or completion, though confidentiality obligations can still apply.
Why sellers ask for one
Requesting an indication of interest before releasing detailed financials lets a seller quickly rule out buyers whose expectations are far outside a realistic range, without going through a full qualification and disclosure process for every inquiry.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryBusiness Broker vs. M&A Advisor in Ontario
- 02Treadstone LawLegal commentaryBuying & Selling a Business
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