If you are selling a business in Singapore, the earliest documents in the M&A process do two jobs at once:
- Market the opportunity to the right buyers without destroying confidentiality.
- Shape the negotiation path long before the definitive agreement (share purchase agreement (SPA) / asset purchase agreement (APA)) is drafted.
Many business owners underestimate these early documents because they are not the definitive agreement. That is a mistake. The early stack: teaser → indication of interest (IOI) → confidentiality/non-circumvention → information memorandum → term sheet/ letter of intent (LOI) quietly determines buyer quality, price tension, deal certainty, and how much leverage you retain once exclusivity is on the table.
This guide explains what each document is for, what is confidential, what tends to be binding, and what happens next, so you can run a disciplined sell-side process instead of reacting to the buyer’s playbook.
For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to +65 8079 0028.
The early-stage document stack at a glance
A typical sell-side sequence looks like this:
- Fact Sheet / Teaser (first formal “no names” marketing document)
- Indication of Interest (IOI) letter (filters for seriousness; usually non-binding)
- Non-circumvention and Non-disclosure Agreement (NCNDA) / Non-disclosure Agreement (NDA) (controls confidentiality and prevents circumvention)
- Confidential Information Memorandum (IM) (deeper marketing document)
- Term Sheet / Letter of Intent (LOI) (sets the foundation for definitive agreement; some clauses being legally binding)
- Due diligence + drafting of definitive agreement (SPA/APA)
- Disclosure letter + ancillary documents + signing/closing mechanics
This article focuses on the documents up to the term sheet/LOI, then explains what “next” typically looks like in practice.
Fact Sheet / Teaser: how you market without giving away the game
The fact sheet (often called a teaser) is the first formal document presented to prospective buyers. It is commonly circulated on a “no names” basis to preserve confidentiality of the seller’s identity.
A strong teaser is short, typically one to two pages, and aims to earn the next step, not to close the buyer. It generally includes a high-level overview of the business and business model, a simple growth narrative, why the business is attractive, and limited historical financial performance (commonly the past three years where available), such as revenue, profit and cash flow. Sometimes, sellers also include projections.
Even “no names” teasers can leak identity through clues. Treat the teaser as confidential by design and keep distribution controlled through your advisory team.
What happens next: if the teaser works, you receive enquiries. Your objective is to filter for seriousness and protect your information before releasing deeper materials.
Indication of Interest (IOI): a seriousness filter, not a final offer
After buyers review the teaser, sellers may request an IOI letter to gauge genuine interest. The practical function is to separate buyers who are merely curious from buyers prepared to commit internal time and credibility to pursue the deal.
IOIs are commonly drafted to be legally non-binding in their commercial terms. They often contain only minimal proposed terms because the buyer has limited information at this stage.
Requesting an IOI is also a deterrent. If a buyer is not genuinely interested, their management team may not want to issue such a letter. This reduces the risk of entertaining parties who are primarily seeking information rather than a transaction.
What happens next: some sellers request the IOI before they proceed to the confidentiality/non-circumvention document(s). That order is deliberate. Ideally, you would want a buyer to show seriousness before you let them into deeper materials.
NCNDA / NDA: confidentiality is not optional, and circumvention is a real risk
An NDA restricts disclosure and prevents misuse of confidential information exchanged during the transaction process. An NCNDA adds non-circumvention protections, typically to prevent parties from bypassing intermediaries or introduced counterparties and dealing directly in a way that harms the introducing party.
An NCNDA may be bilateral, tripartite, or multilateral depending on the sequence of introductions and the parties who need to be protected. As best practice, it is executed before parties and advisors are introduced and before confidential materials are shared.
In operational terms, confidentiality obligations are only as strong as your process controls. Align who gets access, what they get access to, and when access is granted, especially once you move beyond the teaser.
NCNDA terms often run for 1 to 3 years in early-stage M&A contexts, reflecting the reality that deal discussions and follow-on approaches can extend beyond the immediate transaction window.
What happens next: once the confidentiality framework is signed, you can release the IM.
Confidential Information Memorandum (IM): your main marketing document
The IM is one of the seller’s main marketing documents and is typically prepared by the deal advisory team in collaboration with the seller. It elaborates on the teaser and includes more detailed, often confidential information.
A well-prepared IM usually includes a more in-depth overview of the company, management, industry, products and services, growth opportunities, financial performance, and other investment considerations. The goal is to give prospective buyers sufficient insight into material aspects of the business so they can develop a framework to determine valuation.
At this stage, information risk increases sharply. Your IM should be consistent with what you can later support during due diligence. Misalignment between IM messaging and diligence documents is a common cause of friction, price re-trading, or stalled negotiations.
What happens next: after reviewing the IM, serious buyers move toward a term sheet or LOI.
Term Sheet / Letter of Intent (LOI): what’s binding, what’s not, and why you must treat it seriously
A term sheet (or LOI) is usually the first legal document executed between buyer and seller relating to the proposed sale. It sets the foundation for negotiating the definitive agreement.
Term sheets typically address deal structure, the price mechanism, and an exclusivity period for completing the transaction. While most commercial terms are typically non-binding, it is common for certain clauses to be binding, especially confidentiality and exclusivity.
Even where the commercial terms are expressed to be non-binding, the term sheet has consequential impact. It sets the direction of the definitive agreement, influences timing to closing, and frames post-closing matters. In practical terms, it shapes leverage: once exclusivity is granted, the buyer’s bargaining position often strengthens unless you have credible alternatives.
Term sheet versus LOI is often more about format than substance. LOIs are commonly drafted in prose letter form; term sheets are frequently tabular. A well-drafted document, regardless of label, should create a workable negotiation framework by putting concrete points on the table.
What happens next: due diligence begins (often within an exclusivity period), the data room is populated, and drafting of the definitive agreement starts (sometimes in parallel with diligence if parties are aligned).
A high-level overview of next steps after the term sheet: due diligence and definitive agreements
Due diligence is the buyer’s work to assess whether to proceed and on what terms. Buyers are motivated because weaknesses missed pre-acquisition become unknown liabilities post-acquisition. From the seller’s perspective, preparedness and responsiveness are decisive: prompt, complete answers materially increase the probability of completion.
Common diligence workstreams include legal, financial, and tax diligence. Legal diligence often involves reviewing share title, key contracts (tenancy, employment, suppliers/customers), licences and regulatory issues, intellectual property ownership, litigation/insolvency checks, and data privacy compliance. Financial diligence reviews financial statements, assets/liabilities, cash flow, capex, and projections. Tax diligence assesses compliance, liabilities, contingent risks, and opportunities for efficiency.
The definitive agreement (SPA for share sales; APA for asset sales) is the contract that allocates risk and sets rights and obligations for material eventualities, including structure, payment mechanics, completion conditions, post-completion covenants, warranties/indemnities, termination rights, and dispute resolution.
Disclosure letters qualify the seller’s warranties by disclosing known facts, circumstances, and risks. Proper disclosure can materially reduce post-closing claims and disputes from the buyer if it clarifies what the buyer is deemed to know before signing.
For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to +65 8079 0028.
FAQ
Is a teaser the same as an IM?
No. A teaser is a short first-look document (often “no names”) to generate interest while protecting identity. An IM is a much more detailed marketing document designed to give buyers enough material to build a valuation framework and proceed toward a term sheet.
Why ask for an IOI if it’s non-binding?
Because it filters for seriousness. An IOI signals internal buyer commitment and helps you compare buyer intent before you release deeper confidential information.
Do I need an NCNDA, or is an NDA enough?
An NDA protects confidentiality. An NCNDA also addresses circumvention risk, particularly where intermediaries introduce parties. The right document depends on who introduced whom and how you want to protect introductions and process integrity.
Which term sheet clauses are most likely to be binding?
Commonly, confidentiality and exclusivity. Even where commercial terms are non-binding, these provisions are often drafted to reflect parties’ intentions and should be treated accordingly.
Should I, as the seller, sign exclusivity early?
Exclusivity can be appropriate, but it shifts leverage. If you sign it too early or too broadly, you may lose price tension and deal control. It should be negotiated with a clear diligence plan and timeline.
What happens right after the term sheet is signed?
Typically: due diligence begins, the data room is built/populated, and drafting of the SPA/APA sometimes happens in parallel with diligence depending on alignment and urgency.
Is an LOI better than a term sheet?
Not inherently. The difference is often stylistic rather than substantive (letter/prose form vs table form). Substance matters more than label.
Why do sellers need lawyers before the SPA/APA stage?
Because early documents, especially term sheets, shape expectations of risk allocation, timeline, and leverage. Poorly negotiated early documents can hard-wire seller-unfriendly outcomes before the definitive agreement begins.
Disclaimer: Our articles are intended for your general information only. They are not intended to be nor should they be regarded as or relied upon as legal advice. These articles neither constitute nor substitute independent legal advice, and you should still seek independent legal advice for your legal matters. You should consult qualified legal professionals before taking any action or omitting to take action in relation to the matters discussed in our articles.
