When its time to obtain first round bids for your company, one of the most important but often underestimated steps is the creation of clear instructions for the buyers. In the middle market of the aerospace and defense industry, these instructions are critical to ensuring that the early-stage bidding process is structured and optimized to achieve the best possible results for the seller.
Indications of Interest (IOIs) instructions are a set of instructions that we provide to the parties who are interested in buying your company. The instructions set forth the details that must be included in their bids, in order for them to be compliant and to be considered. In most cases, these details will include price and structure. In some cases, it will also include escrows and indemnity caps. In other cases, it will include other details that are important to the seller.
For many companies in the aerospace and defense industry, regulatory issues can be extremely important and may need to be included in your IOI introductions to buyers. For example, you may want the buyer to say they currently have or are comfortable with regulations pertaining to International Traffic in Arms Regulations (ITAR), Defense Federal Acquisition Regulations (DFAR) or Federal Aviation Administration (FAA) requirements. In certain circumstances, you may need or want to limit your buyers to only companies that are owned or controlled by US Citizens.
Well-crafted IOI instructions go well beyond just price to capture all matters that are critically important to you and to the process. Without clear IOI instructions, buyers may omit critical issues that could make their offers far less attractive to you in the end. This is particularly relevant when evaluating buyers with varying levels of foreign ownership or control.
Well-structured IOI instructions help ensure that all of the buyers submit information in a consistent manner, allow the seller to compare initial bids with more clarity and consistency.
Have a great day,
Troy Medeiros
Vice President
