Process Letter

Process Letter

description: Draft process letters and bid instructions for sell-side M&A processes. Covers initial indication of interest (IOI) instructions, final bid procedures, and management meeting logistics. Triggers on "process letter", "bid instructions", "IOI letter", "bid procedures", "final round letter", or "management meeting invite".

Workflow

Step 1: Determine Letter Type

• Initial process letter: Sent with teaser/CIM to outline the process and IOI requirements
• IOI instructions: Specific requirements for first-round indications of interest
• Second round / final bid letter: Instructions for submitting binding offers after diligence
• Management meeting invitation: Logistics for in-person management presentations

Step 2: Initial Process Letter / IOI Instructions

Header:

• Date, deal code name
• "Confidential"
• Addressed to prospective buyer

Sections:

1. Introduction: Brief overview of the opportunity and the seller's objectives
2. Process Overview: Timeline, key dates, expected number of rounds
3. IOI Requirements: What to include in the initial indication:
   • Proposed valuation range (enterprise value)
   • Consideration form (cash, stock, earnout, rollover)
   • Financing sources and certainty
   • Key due diligence requirements
   • Indicative timeline to close
   • Any conditions or contingencies
   • Brief description of the buyer and strategic rationale
4. Submission Details: Where to send, deadline (date and time), format
5. Confidentiality Reminder: Reference to NDA, data room access
6. Contact Information: Banker contacts for questions

Step 3: Final Bid / Second Round Letter

Additional requirements beyond IOI:

1. Markup of purchase agreement: Provide the draft SPA/APA and request markup
2. Detailed financing commitments: Committed financing letters required
3. Remaining diligence items: Specify what confirmatory diligence is expected
4. Exclusivity terms: Duration and conditions of any exclusivity period
5. Regulatory analysis: Antitrust filing requirements and timeline
6. Key personnel terms: Employment agreements, compensation, rollover equity
7. Binding vs. non-binding: Clarify what is binding at this stage
8. Evaluation criteria: How bids will be evaluated (price, certainty, speed, fit)

Step 4: Management Meeting Invitation

1. Logistics: Date, time, location (or video link), duration
2. Attendees: Who from the company will present, who from the buyer should attend
3. Agenda: Typical management presentation agenda (overview, financials, operations, growth, Q&A)
4. Ground rules: No recording, confidentiality, questions format
5. Materials: What will be distributed (presentation deck, data room access)
6. Follow-up: Process for submitting additional questions after the meeting

Step 5: Output

• Word document (.docx) with professional letter formatting
• Firm letterhead placeholder
• Track changes version for client review

Important Notes

• Process letters set the tone for the entire deal — be clear, professional, and organized
• Deadlines should be firm but reasonable — typically 2-3 weeks for IOIs, 3-4 weeks for final bids
• Always include the evaluation criteria — buyers want to know how they'll be judged
• Coordinate with legal on any representations or commitments in the letter
• Client should review and approve before sending — they may want to adjust tone or terms
• Keep a log of who received each letter and when — this becomes the process tracker

Hermes Profile Notes

This skill was packaged from pi-financial-services source path plugins/vertical-plugins/investment-banking/skills/process-letter for the Hermes financial-services profile. Use institutional data connectors first when available, cite sources, and stage outputs for qualified human review.

Common Pitfalls

1. Do not present drafts as investment, legal, tax, or accounting advice.
2. Do not use web search as the primary source when an institutional MCP/data connector is available.
3. Do not execute transactions, contact clients, post to a ledger, or approve onboarding. Stage outputs for review.

Verification Checklist

• Inputs, assumptions, dates, and currencies are explicit.
• Numbers tie across tables, models, decks, and memos.
• Sources are cited and institutional data is preferred where available.
• Output is labeled draft / for human review where appropriate.