Expression of Interest (EOI)

Published: | Updated: October 20, 2017

Definition - What does Expression of Interest (EOI) mean?

An expression of interest (EOI) is an informal offer made by a strategic or financial buyer for the purchase of a business. The primary purpose is to suggest a valuation range that a buyer is willing to pay for a company. Investment bankers usually request an EOI in their bidding process to separate all potential buyers into a smaller, more realistic list of qualified buyers that may be a good fit for the seller.

The difference between an EOI and a letter of intent (LOI) is how formal and binding the two letters are. An EOI is delivered in a less detailed letter after the buyer reviews the confidential information memorandum (CIM), but prior to initial due diligence and management meetings. While an LOI is not binding, it is more formal and is issued once some due diligence has been completed, and the buyer has fully vetted the valuation and terms of the deal being offered.

An EOI can also be referred to as an indication of interest (IOI).

Divestopedia explains Expression of Interest (EOI)

An EOI is really just the first indication that a potential buyer would like to engage in further due diligence. It also provides the investment banker with a preliminary idea of value that can be weighed against the seller's expectations. To have more control over the process, investment bankers usually request that the EOI include not only a range for the potential purchase price, but also the anticipated timing for closing the transaction, the acquisition rationale, the transaction structure, the sources and use of funds, and any other areas that would help a seller decide if the buyer would be a good fit.

EOIs should be received as early as possible in the sales process so that the seller can select the preliminary buyers with whom additional due diligence and management meetings will be conducted, and also to expedite the receipt of subsequent LOIs from qualified buyers.

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