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Non Binding Offer

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Key Highlights

  • A Non-Binding Offer (also known as an indicative offer or non-binding indicative offer) is a preliminary proposal submitted by a potential buyer to a seller during a sales process, such as a business acquisition or asset sale.

  • his document outlines the main terms and conditions under which the buyer is interested in pursuing the transaction, but it does not legally commit either party to complete the deal.

What is Non-Binding Offer?

A Non-Binding Offer (also known as an indicative offer or non-binding indicative offer) is a preliminary proposal submitted by a potential buyer to a seller during a sales process, such as a business acquisition or asset sale. This document outlines the main terms and conditions under which the buyer is interested in pursuing the transaction, but it does not legally commit either party to complete the deal.

Key Features

1. Indicative and Non-Legally Binding: The offer expresses interest and sets out proposed terms, such as price, payment structure, and key conditions, but does not create a binding contractual obligation to proceed. Either party can withdraw or renegotiate terms before a definitive agreement is signed.

2. Negotiation Tool: It serves as a starting point for negotiations, helping both parties clarify their expectations and assess whether there is enough alignment to justify further due diligence and resource investment.

3. Components: Common elements in a non-binding offer include:

  • Proposed purchase price or price range

  • Payment terms (e.g., cash, shares, deferred consideration)

  • Key conditions (such as regulatory approvals and due diligence)

  • Confidentiality and exclusivity clauses

  • Timeline for completing the transaction

4. Due Diligence: The offer is typically made before detailed due diligence. Its terms may change or the deal may not proceed if issues are uncovered during due diligence.

5. No Legal Commitment: The non-binding nature protects both parties from legal obligation until a definitive, binding agreement is executed.

Purpose and Use Cases

  • Used in mergers and acquisitions, business sales, and asset purchases to initiate discussions and set a framework for negotiation.

  • Helps both buyer and seller evaluate if their terms and expectations are compatible before incurring significant costs or disclosing sensitive information.