11.1. The Engagement Letter
Exam questions for Function 3 will definitely ask about key M&A documents. Most likely, you will get multiple questions about these documents. Fortunately, some of these documents are similar in function to various offering documents we learned about in Chapters 5–10, although the M&A versions of these documents are often more complex, to match the complexity of M&A transactions. We will discuss each of these documents in more detail as they come up.
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M&A Documents Commonly Asked About on the Exam |
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Document |
Function |
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Engagement Letter |
Sets out terms of relationship between seller/buyer and sell/buy-side adviser |
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Teaser |
Generate buyer interest by providing general information; not confidential |
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Confidentiality Agreement (CA) |
Binding contract preventing prospective buyer from misusing confidential information in various ways |
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Confidential Information Memorandum (CIM) |
Provides additional transaction information to prospective buyers who have signed the CA |
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Initial Bidding Procedures Letter |
Instructions to prospective buyers for submitting IOIs |
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Indication of Interest (IOI) |
Non-binding purchase proposal from a prospective buyer; signals a desire to be included in the second round of bidding |
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Final Bidding Procedures Letter |
Instructions to prospective buyers who were included in second round of bidding; instructions for submitting final bids |