Indicative Offer - Non-Binding Offer (NBO)
A Non-Binding Offer (NBO) is a non-binding declaration of intent to purchase. It serves as an initial offer from a potential buyer who has expressed interest in acquiring a company.
What is the purpose of an indicative offer?
The indicative offer is an essential component of the company sale process. Sellers typically use it to gather initial offers from interested parties and select the most suitable candidates for the next phase. Especially when there are multiple interested parties, the NBO serves as a basis for comparing offers and narrowing down the pool of potential buyers.
Process of a Bidding Process with an Indicative Offer
Submission of the Initial Offer: Interested parties submit a non-binding offer that signals their intent to purchase.
Selection by the seller: M&A advisors assist the seller in selecting suitable candidates based on the initial offers.
Access to Company Data: After the selection process, the remaining interested parties are granted access to a data room containing detailed information about the company.
Conducting Negotiations: Based on the findings from due diligence, initial negotiations begin between the seller and interested parties to clarify outstanding issues.
From Initial Offer to Binding Offer: Following negotiations and review of the company data, a binding purchaseoffer is submitted.
Strategic Value of the Indicative Offer
The indicative offer not only serves to narrow down the pool of suitable prospective buyers but also provides sellers with a basis for developing realistic price expectations. It also facilitates the start of targeted negotiations by enabling potential buyers to clearly state their position. This allows the sale of the company to be structured early on and advanced efficiently.