Binding Offer
A binding offer is a binding proposal made in the context of a company sale. It thus constitutes a contractual agreement that is binding on both parties (buy-side and sell-side). The offer typically includes the purchase price as well as all terms and conditions of the sale. These include, for example, the method of payment, the assumption of liabilities, and the transfer of assets.
Distinction from a Non-Binding Offer
A binding offer differs from a non-binding offer—also known as an indicative offer —in that it is legally binding. Once the offer is accepted, both parties are obligated to complete the sale. Therefore, you should ensure that you have all relevant information about the company before submitting such an offer. A due diligence review gives you the opportunity to examine the company more closely and identify potential risks and opportunities.