Mergers and Acquisitions (M&A) are multi-staged legal and strategic journeys. One of the most critical stages of this process is the preparatory phase, where parties define their intentions and boundaries before the detailed Due Diligence process begins.
The following guide outlines the critical items during the teaser, NDA (Non-Disclosure Agreement), CIM (Confidential Information Memorandum), NBO/LOI (Non-Binding Offer/Letter of Intent) and acceptance letter stages, aiming to aiming to structure the relevant documents as intended, minimize risks for both buy-side and sell-side, and establish a transparent and disciplined negotiation framework.
The items listed in this guide are general in nature and not exhaustive. Additional considerations and critical items may apply depending on the transaction structure, the target company, and its sector of activity. Sell-side and buy-side parties are advised to engage relevant stakeholders, including financial, tax, technical, and legal advisors, throughout the process.
This guide is intended as a practical reference and does not constitute legal, financial, or investment advice.
Phase 0: Teaser
The teaser is the first formal communication used to introduce the transaction opportunity to potential buyers without disclosing sensitive or identifying information about the target. Its primary objective is to test market appetite, attract interest, and identify serious counterparties before entering into confidentiality arrangements. The following points should be carefully considered when preparing a teaser:
✓ Non-Confidential Content Only
The teaser must not include any information that could directly or indirectly identify the target company. Company name, brand, customer names, exact financial figures, proprietary technology, or identifiable operational details should not be included.
✓ Clear Transaction Rationale
Articulate the strategic logic of the transaction (e.g., growth, consolidation, market entry, succession planning) in a concise and neutral manner, without overstating value or prospects.
✓ High-Level Business Overview
Describe the target’s business model, sector, geographic footprint, and value proposition at a high level. The objective is to inform without revealing sensitive competitive information.
✓ Indicative Financial Snapshot
Financial information can be included as high-level and anonymized (e.g., revenue range, EBITDA margin band, growth trend), avoiding precise figures that could enable identification.
✓ Transaction Scope
The teaser should clarify whether the contemplated transaction is a share deal, asset deal, or mixed structure, and whether minority or majority participation is envisaged, where relevant.
✓ Limited Distribution
The teaser should be shared with a limited and pre-selected audience by an advisor of the shareholder(s).
✓ Legal and Commercial Disclaimers
The teaser should clearly be positioned as an informational document only, without creating any binding obligations or expectations for either party.
Phase 1: Non-Disclosure Agreement (NDA)
The objective in this phase is to safeguard the seller upon the commencement of information disclosure, whilst ensuring the buyer is not exposed to undue obligations. The following critical items should be considered.
✓ Definition of “Confidential Information
Ensure the scope is broad enough to cover all data shared (including the existence of discussions) but excludes public information or independent developments.
✓ Permitted Representatives
Clearly define who can access the data (employees, legal/financial advisors, potential lenders) on a “need-to-know” basis.
✓ Term & Survival
Determine the duration of the confidentiality obligation (typically 2-5 years).
Note: Trade secrets should remain confidential indefinitely.
✓ Non-Solicitation
Include clauses preventing the buyer from poaching key employees or soliciting customers if the deal falls through.
✓ Return or Destruction of Data
Establish clear procedures for returning or destroying confidential documents if discussions terminate.
Phase 2: Confidential Information Memorandum (CIM)
The Confidential Information Memorandum is the principal disclosure document of the pre-due diligence phase. It provides potential buyers with a structured, comprehensive, and consistent overview of the target company following execution of the NDA. The CIM should enable buyers to assess the transaction opportunity, refine their valuation assumptions, and determine whether to proceed to due diligence and submit an offer.
The CIM should be shared only with NDA-bound parties and subject to strict version control. Updates or supplements should be clearly identified to avoid reliance on outdated information. The following key points should be considered when preparing a CIM:
✓ Consistency with Teaser and Transaction Narrative
The CIM should be fully aligned with the teaser and the overall transaction rationale. Any inconsistencies in strategy, scope, or positioning may undermine credibility and raise concerns during later stages.
✓ Clear Structure and Logical Flow
The CIM should follow a clear and logical structure, typically covering business overview, products and services, markets and competition, customers, operations, management, financial performance, and growth strategy.
✓ Accurate and Balanced Disclosure
Information should be factual, balanced, and substantiated. Overly optimistic projections, selective disclosure, or omission of material risks may lead to credibility issues, renegotiation, or even create liabilities at later stages.
✓ Financial Information and Assumptions
Historical financial data, key performance indicators, and (if included) forward-looking information should be clearly presented, with assumptions and limitations expressly stated. It is important to include a disclaimer for forward-looking statements to be identified as indicative and non-binding.
✓ Identification of Key Risks
Material legal, regulatory, operational, financial, or market risks should be disclosed at a high level. Early transparency on key risk areas supports trust and reduces the likelihood of later deal disruption.
✓ Use of Disclaimers and Limitation Language
The CIM should include appropriate disclaimers clarifying that it is provided for information purposes only, does not constitute an offer, and that no representations or warranties are given except as set out in the definitive transaction documents.
✓ Alignment with Data Room Preparation
The CIM should be prepared in parallel with data room planning, ensuring that information presented can be substantiated during due diligence.
Phase 3: Non-Binding Offer / Letter of Intent (NBO / LOI)
This phase serves as the gateway to the Due Diligence process, wherein the framework of the commercial terms is delineated. The following critical items should be considered.
✓ Binding vs. Non-Binding Provisions
Explicitly state which clauses are binding (Exclusivity, Confidentiality, Governing Law, Expenses) and which are NOT (Price, Deal Structure).
✓ Deal Structure & Valuation
Clarify whether it is a Share Deal or Asset Deal. Define the price mechanism (e.g., Cash-free/Debt-free Enterprise Value vs. Equity Value).
✓ Exclusivity
Define the “Exclusivity Period” granted to the Buyer to conduct Due Diligence (usually 30-90 days).
✓ Conditions Precedent (CPs)
List key conditions for closing, such as Regulatory Approvals (Competition Board), satisfactory Due Diligence results, and financing.
✓ Due Diligence Scope & Timeline
Outline the scope of the investigation (Legal, Financial, Tax, Technical) and the access to the Data Room.
✓ Transaction Expenses
Specify that each party will bear its own costs regarding the transaction process.
✓ Governing Law & Dispute Resolution
Determine the governing law and the jurisdiction (e.g., Turkish Courts or Istanbul Arbitration Centre – ISTAC) for any disputes arising from the NBO/LOI.
Phase 4: Acceptance Letter
The Acceptance Letter is issued by the seller to formally acknowledge and accept the selected NBO/LOI, thereby confirming the parties’ intention to proceed to the due diligence phase (and, where applicable, exclusivity).
In practice, the Acceptance Letter often functions as a procedural bridge rather than a negotiated document. However, insufficient clarity at this stage may result in disputes regarding exclusivity, timing, or perceived commitments later in the process. The following key points should be considered when issuing or reviewing an Acceptance Letter:
✓ Clear Reference to the Accepted NBO/LOI
The Acceptance Letter should clearly identify the relevant NBO/LOI being accepted, avoiding ambiguity as to scope or commercial understanding.
✓ Clarification or Qualification of Buyer Assumptions
Where the NBO/LOI is based on specific assumptions (e.g., financial metrics, operational structure, asset ownership, or regulatory status), the Acceptance Letter may confirm such assumptions subject to expressly stated qualifications or exceptions, to avoid implicit acceptance of inaccurate premises.
✓ Conditional Acceptance of Valuation Parameters
The seller may accept the proposed valuation (e.g., Enterprise Value) subject to specific matters being reviewed or reassessed during the due diligence or negotiation phase, such as real estate valuation, non-operating assets, extraordinary items, or off-balance-sheet elements not reflected in EBITDA, if any.
✓ Identification of Items Reserved for Further Discussion
The Acceptance Letter may expressly reserve certain topics for further discussion in subsequent phases, including but not limited to asset valuation methodologies, working capital adjustments, net debt definition, or treatment of non-core assets.
✓ Confirmation of Exclusivity (if applicable)
If exclusivity is granted, the Acceptance Letter should expressly confirm the exclusivity period, its start date, duration, and any conditions or carve-outs agreed in the NBO/LOI.
✓ Non-Binding Nature of Commercial Terms
The Acceptance Letter should reiterate that, except for explicitly binding provisions (e.g., exclusivity, confidentiality, costs), the transaction remains subject to due diligence, internal approvals, and definitive agreements.
✓ Scope and Commencement of Due Diligence
The letter should confirm the commencement of the due diligence phase, including anticipated scope (legal, financial, tax, technical, etc.) and practical next steps such as data room access and management presentations.
✓ Conditions
Any key reservations, assumptions, or conditions relied upon by the seller (e.g., timing, regulatory considerations, board or shareholder approvals) should be expressly stated to avoid implied commitments.
✓ No Obligation to Complete
The Acceptance Letter should clearly state that neither party is obliged to complete the transaction unless and until definitive transaction documents are executed.
✓ Transaction Timeline
The Acceptance Letter should be consistent with the proposed transaction timetable and upcoming milestones, ensuring procedural clarity for both parties. Where the proposed timeline is not considered practicable, the Acceptance Letter should set out an alternative timetable together with a brief explanation for such adjustment.
✓ Incorporation or Amendment of Legal Provisions
The Acceptance Letter may incorporate the binding legal provisions of the NBO/LOI by reference, or, where deemed necessary, introduce the seller’s own legal provisions (such as governing law, dispute resolution, confidentiality, or exclusivity) to apply specifically to the Acceptance Letter.
