What should a seller share with buyers before an LOI, and what should they hold back?

What should a seller share with buyers before an LOI?

Share enough for a buyer to price the business and nothing that a competitor could use against you, and release it in rounds: a blind teaser, a confidential information memorandum (CIM) after an NDA, a limited pre-LOI data room, and full confirmatory access only after the LOI is signed. Each round should earn the next one. The same discipline applies to data licensing, where partners share basic fit information only.

This guide gives M&A advisors a round-by-round disclosure plan, a hold-back list, and a parallel rule for the data-licensing introductions you may make alongside a sale.

What does each disclosure round contain?

The teaser template shows what can go in the first round without naming the company.

How do you decide what is competitively sensitive?

Use the 3-question hold-back test before any document leaves the building:

1. Could a bidder who walks away use this to win a customer, hire an employee or beat our pricing?
2. Does a customer, employee or vendor contract limit who may see this?
3. Does it contain personal data that a buyer does not need yet?

If the answer to any is yes, aggregate it, redact it, or move it to a later round. Where a strategic buyer is a competitor, route price lists and customer names through a clean team of outside advisors. When you can say why a document is held back, buyers accept staged access as normal process rather than evasion.

How should you stage the pre-LOI data room?

Open the room after the first-round bids, to a short list only, and build it by folder with permission levels. Typical pre-LOI folders hold:

• Monthly income statements and balance sheets for the trailing periods the buyer asks for
• A reconciled revenue schedule that ties to the general ledger
• Customer cohort summaries with names replaced by codes
• Organization chart by function, with no individual compensation
• Standard customer and vendor contract templates, not the signed set
• A short list of open legal matters, if any, described at summary level

Reconcile numbers before anyone sees them. Buyers lose confidence faster over mismatched figures than over a weak metric. Questions to ask buyers in return are in questions to ask a buyer before you sell.

How do you handle a bidder who asks for more than the round allows?

Say yes to the question and no to the document. Offer a call with the CFO, an aggregated schedule or a coded sample, and log the request. Bidders who push for raw contracts early are often testing process discipline, and a consistent answer protects the other bidders' confidence too. Keep a request tracker by bidder so every answer is the same across the field, and have counsel approve any exception in writing.

What changes between pre-LOI and confirmatory access?

The LOI converts curiosity into exclusivity and a deadline, so access widens sharply: signed contracts, employee files, security assessments and system walk-throughs. Plan the handover as a checklist and timeline, as described in confirmatory due diligence. If exclusivity runs out before diligence ends, the advisor's options are covered in what happens when LOI exclusivity expires. Contract assignment questions that often surface here are explained in are software licenses transferable in an acquisition.

How does staged disclosure apply to a data license?

The parallel rule is simple. In a data-licensing introduction, partners share only basic fit information, and record samples move only under an executed agreement.

Redaction and de-identification requirements are agreed with the company before any work begins. Nothing is binding until the company agrees price and terms and signs.

How does an advisor raise it without disrupting the sale?

Raise it as a parallel, optional workstream before the first bid deadline, so it never competes for the owner's attention during diligence. Screen the client first with the company fit checker, a preliminary, non-binding check, and read the who qualifies page for the full baseline (50+ full-time employees at peak, contractors excluded). The M&A advisor page explains the advisor role, and the buyer list guide shows where AI data buyers sit relative to your sale buyers.

What do partners earn, and what do they not?

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 cumulative per referred company, and a reward becomes payable only after the buyer pays and SourceX receives its fee. Rewards are not guaranteed. The partner reward is a share of SourceX's fee and is never deducted from what the company receives. Advisors who hold securities licenses or professional registrations should check their own firm's compliance rules on referral fees and disclosure before deciding whether to participate.

What are the most common mistakes?

Next step

Register as a partner to receive your referral link, then screen clients with the fit checker. Owners can also apply at sourcex.si/apply.