IOI in Mexico: a guide for buyers and sellers

An IOI (Indication of Interest) is the non-binding document in which a buyer states its interest in acquiring a company and indicates indicative terms — value, consideration structure, and assumptions — before the LOI. The seller uses it to filter offers and decide which buyer(s) to advance with. This guide explains where the IOI fits in the M&A process in Mexico, what it should include, how to prepare as buyer or seller, and what comes next.

What should an IOI include (buyer)?

The buyer must be clear without legally committing. The standard elements:

• Indicative enterprise value. Range or point (e.g. 4.0–4.5× normalized EBITDA); the number must be anchored in the CIM and the assumptions the buyer is making.
• Indicative consideration structure. Approximate percentages for cash at closing, seller note, contingent (earn-out) if applicable.
• Main assumptions. Assumed normalized EBITDA, working capital, debt and cash as of the reference date. What is not clarified here creates friction at the LOI stage.
• Conditions the buyer would expect. Access to due diligence, exclusivity period if selected, expected timeline to close. Indicative, not binding.

How to prepare as seller?

Before receiving IOIs: have the CIM and data room in order, and clear criteria to compare offers. When evaluating IOIs:

1. Compare value and structure across offers; check that assumptions (EBITDA, working capital) are reasonable and documented.
2. Identify the two (or one) strongest offers: not just the highest number, but coherence between value and structure and buyer seriousness.
3. Give data room access or meetings only to the shortlisted; the rest are out of the process for that round.
4. Negotiate the LOI with the chosen one(s); the LOI specifies what the IOI indicated. More in how to structure a purchase offer in Mexico.

How to prepare as buyer?

Review the teaser and CIM thoroughly before drafting the IOI. Rebuild normalized EBITDA independently and document the adjustments; if the CIM does not clarify something (working capital, debt), include it in the IOI assumptions so the seller sees the work was done. The offer must be indicative but coherent: value and structure aligned, with no promises that cannot be sustained in the LOI. A vague or contradictory IOI weakens the buyer’s position in the next round.

Tools like the normalized EBITDA calculator and the consideration structure simulator help anchor numbers and structure before sending the IOI.

What comes after the IOI?

When the seller chooses the buyer (or two to negotiate in parallel), the process moves to LOI negotiation. The LOI sets exclusivity, due diligence period, closing conditions, and adjustment mechanisms; the buyer gets data room access and runs due diligence. If there are no material findings, the process moves to the definitive agreement and closing. The guide on how to structure a purchase offer in Mexico details the terms that get specified in the LOI; the one on due diligence in Mexico covers what to expect in the next phase.

What do buyers and sellers ask about the IOI?

Is the IOI binding on the buyer?

No. The IOI is expressly non-binding. The buyer is not committed to close or to keep the value or structure indicated; it can withdraw or change its position at the LOI stage. It includes confidentiality commitments (if there was no separate NDA) and a statement that the information is used only to evaluate the transaction. The first document with binding clauses is the LOI.

What should an IOI include in an M&A process in Mexico?

Indicative enterprise value (range or point, e.g. multiple of normalized EBITDA), indicative consideration structure (cash at closing, seller note, contingent tranche), main assumptions (EBITDA assumed, working capital, debt and cash), conditions the buyer would expect (access to due diligence, exclusivity if it advances), and when applicable the expected timeline to close. It does not include detailed legal language or representations and warranties; those go in the LOI and the definitive agreement.

When do you move from IOI to LOI?

When the seller chooses one or two buyers to negotiate with exclusively or in parallel, and the buyer is willing to formalize. The LOI is negotiated on the basis of the IOI: value, consideration structure, exclusivity period, and closing conditions are specified. The step is accompanied by an exclusivity period during which the seller does not negotiate with others, in exchange for the buyer investing in due diligence and preparing the agreement.

In which sale processes in Mexico are IOIs used?

In structured processes where the seller or its advisor sends a teaser, then a CIM to buyers that signed an NDA, and receives offers in one or two rounds. The first round is in IOI form; based on those, the buyers that move to the next phase (data room, management meetings) and then to LOI negotiation are selected. In bilateral sales with a single known buyer, the IOI may be skipped and the process goes straight to LOI.