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What is Expression of Interest that strategic financial buyer uses for buying tender

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EOI or Expression of Interest is an application that a strategic financial buyer uses for buying a tender. The investment bankers are usually requested for EOI in their bidding process to segregate all potential buyers into a list of qualified buyers that may be a good fit for the sellers.

The Expression of Interest letter is delivered with not much detail because the buyer usually goes through the confidential information memorandum (CIM) before the management meetings are held.

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The Expression of Interest is the first indication that a potential buyer is interested in further engaging in due diligence. It also provides the banker an idea about who is investing with what approximate value.

To gain more control over the process, the potential buyer must include the possible purchasing price, the estimated timing for closing the transaction, and the mode of payment so that the seller can decide if the buyer is eligible.

How to write the Expression of Interest?

When the tenders for the contract are promoted, the interested parties apply directly to the online portal that comes with a short description. The potential tenders are invited to register with an initial EOI- Expression of Interest.

Now, the purchaser expresses their interest in the bidding to get access to contract documentation through EOI.

Now, if they do not want to proceed further, then they are free to withdraw the application at any time without any obligation.

Generally, an EOI should always begin with an introductory praising word targeting the seller company.

Now let’s have a look at the contents of the Expression of Interest application:

Purchase Price: An EOI must mention the exact purchase price or the price range that the buyer is ready to pay in full cash with no debt and including all the other associated expenses. The buyer must also reserve the right to alter the terms of payment.

Valuation Methodology: This mentions the valuation of the tender and the critical assumptions taken by the buyer to accomplish the assessment. This offer is mostly made based on the seller’s future predictions.

Due Diligence: Next, the buyer seeks permission to get an opportunity to conduct the due diligence with the utmost satisfaction with both the business and the seller.

It may also highlight some of the significant areas that the buyer would look at while conducting business like diligence on finance, legal marketing, customer contracts, human resources, and a lot more.

Transaction structure: The buyer needs to explain the structure of the transaction in which they are interested. They must mention the mode of purchasing the price that is either with cash or a bank loan.

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Management Retention plan: The buyer indicates the program to the senior management of the seller and explains the type of arrangement that they handle.

Transition and support services: The buyer mentions the need for transition and support services over a specific time to manage the business, and they will pay no extra charges.

Approval required for the transaction- to initiate the final deal, the buyer requires permission from its Board of Directors.

Conduct of business: The buyer expects that the seller will conduct the business frequently without creating any impact on the industry.

Confidentiality: The buyer proposes that privacy is maintained and the company name, the third party name is not disclosed without the consent of the buyer.

Finally, the application ends with a conclusion with a thanking note to the seller.

Non-binding Agreement: The buyer may also not choose to proceed with the transaction at the end as EOI is just a letter of interest, nothing mandatory.

Finally, the letter ends with a thanking note, and the buyers must never forget to mention their details for further communication.

Do you wish to have a look at all the tender notifications that are issued by the Local Self Government Department (LSGD)? Then have a look at their website where all tenders can be filtered based on their submission date, tender value, and project location.

But if you want to browse through the public and government tenders available all over India, then you can take help from BidAssist.

All you have to do is visit BidAssist and explore all the Indian government’s e-tender portal.

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Krishna Mali
Krishna Mali
Founder, CEO & Group Editor of TechGraph.

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