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Key Takeaways

An Indication of Interest (IOI) is a preliminary, non-binding document expressing a party's serious interest in pursuing a transaction, such as acquiring a business.
It allows both parties, buyer and seller, to gauge the feasibility of a deal before investing significant time and resources in more detailed negotiations.
While the IOI is non-binding, it sets the stage for the development of a more detailed agreement, a Letter of Intent (LOI), if the parties decide to proceed with the transaction.

Key Takeaways

An Indication of Interest (IOI) is a preliminary, non-binding document expressing a party's serious interest in pursuing a transaction, such as acquiring a business.
It allows both parties, buyer and seller, to gauge the feasibility of a deal before investing significant time and resources in more detailed negotiations.
While the IOI is non-binding, it sets the stage for the development of a more detailed agreement, a Letter of Intent (LOI), if the parties decide to proceed with the transaction.

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Updated Dec 20, 2023

The Definitive Guide to an Indication of Interest

The first half of 2024 has brought a major and significant slowdown in carwash M&A, along with a stark decrease in the dispersion of acquiring parties. Transaction count is down ~46% and the number of sites sold and acquired is down nearly 40%, both compared to the first half of 2023. By way of most active acquirers, 2024 posted a large increase in deal concentration. Most notably, during the first half of 2023, the most active acquiror by transaction count was El Car Wash, having been the acquiring group in just 11% of the announced transactions. The first half of 2024 had Whistle Express representing a commanding 43% of deals as the acquiring group. In this industry report, we cover all announced M&A transactions in Q2 and provide a candid overview of market trends.

View Report

An Indication of Interest (IOI) is a preliminary, non-binding document expressing a party's serious interest in pursuing a transaction, such as acquiring a business. The IOI is less formal than a Letter of Intent (LOI) and serves as an initial step in the negotiation process. Key features of an Indication of Interest include:

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Expression of Interest:

Clearly states the party's interest in pursuing a potential transaction.

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Proposed Terms:

Outlines key terms of the proposed deal, including the purchase price range, structure of the transaction, and any other significant financial considerations.

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Assumptions:

Highlights any conditions or assumptions that the party is making in expressing interest.

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Confidentiality Commitment:

Typically includes a commitment to maintaining the confidentiality of the information shared during the negotiation process.

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Non-Binding Nature:

Clearly specifies that the IOI is non-binding, meaning that the party is not legally obligated to proceed with the transaction based on the terms outlined in the document.

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Due Diligence:

Expresses an intention to conduct further due diligence to assess the feasibility and risks associated with the transaction with the intention of submitting a formal LOI.

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Exclusivity (Optional):

May include a provision requesting exclusivity, meaning the seller agrees not to negotiate with other potential buyers for a specified period.

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Timing and Process:

Provides an estimated timeline for completing due diligence and progressing to the next stages of negotiations.

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The IOI is a tool used by potential buyers to communicate their serious interest in a transaction and to initiate discussions with the seller. It allows both parties to gauge the feasibility of a deal before investing significant time and resources in more detailed negotiations. While the IOI is non-binding, it sets the stage for the development of a more detailed agreement, a Letter of Intent (LOI), if the parties decide to proceed with the transaction.
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Car Wash Advisory is an M&A firm dedicated to serving the car wash industry. Contact us to learn more or to speak to a car wash broker.