Binding offer


The binding offer is a commitment prior to the acquisition of a company.Therefore, the binding offer is the step prior to signing a sales contract and it will be necessary to collect the essential conditions of the operation.

The master lines of the agreement will be reflected in the binding offer document. What is sought through this type of agreement is to unite the wills of those who want to buy the company and those who intend to sell it.

It is very common to hire experts to assess the company before signing the agreement.

Characteristic elements of the binding offer

There are three fundamental features that make up the binding offer:

  1. All the points of the agreement must be sufficiently specific. In this way, the seller's acceptance will be sufficient to carry out the contract.
  2. The seller's commitment to be bound must be expressly indicated if the buyer gives his consent.
  3. It must be addressed to the seller.

How is a binding offer made?

For a business sale process, it will be advisable to have as many potential buyers as possible. Once the interested parties are gathered, a restricted auction will take place. The interested parties will then propose binding offers.

Potential buyers must sign a confidentiality agreement and make their proposals. Subsequently, the seller would send a summary with the information of the most important data of the company. This will be the moment in which the experts proceed to verify the value of the company as well as the legal conditions of the operation, that is, what is also known as due diligence.

After the audit, the seller will decide whether or not to make offers for the acquisition of the company.

Basic content of the binding offer

Some of the elements that this offer must include are the following:

  • Identifying data of the buyer.
  • Price, form and date of payment.
  • Taxes associated with the operation.
  • Offer validity deadline.
  • Data Protection.

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