Indication of Interest (IOI) vs. Letter of Intent (LOI)
An indication of interest (IOI) is an informal notice of an investor’s interest in purchasing or acquiring an
asset. It is non-binding and less definitive than a letter of intent (LOI). The indication of interest includes
value ranges and less specific transaction details. The IOI, coming before the LOI, begins the negotiation
process.
At the end of negotiations, the formal LOI is created, defining the specific details of the transaction. Like
the IOI, it is not a legally binding agreement. Rather, it expresses the investor’s commitment to purchase a
security and serves as the foundation for the formal contract.
Upon review, an agreement can be made if the seller accepts the terms of the LOI. Upon execution, the
seller enters an exclusive agreement with the buyer, prohibiting them from engaging with other buyers
for a period.
Either party to a transaction can terminate negotiations since IOIs and LOIs are non-binding