Binding offer

A binding offer (or firm offer) is a formal acquisition proposal submitted by a buyer at a specified price and on defined terms, which the buyer is contractually committed to honour if the seller accepts within the defined timeframe. It follows the non-binding indicative offer phase and precedes the signing of the SPA. The binding offer is typically submitted after completion of financial due diligence and legal review. It specifies the final price, proposed structure, conditions precedent, key SPA terms and timeline to closing. In a competitive sale process, multiple binding offers are solicited simultaneously to maintain competitive tension. Sellers compare binding offers not only on price but on certainty of execution: financing commitments, condition packages and required approvals. Submission of a binding offer usually triggers exclusivity for the preferred bidder, and its price may only be adjusted through the mechanisms it specifies.

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Example: following a 6-week due diligence on a Swiss engineering company, a buyer submits a binding offer at CHF 18.5 million enterprise value, with a locked-box price mechanism, a 12-month retention of CHF 1.5 million on a W&I insurance-backed basis, and a closing condition on antitrust clearance. The offer remains open for acceptance for 10 business days.

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Hectelion advises sellers and buyers on the structuring and negotiation of binding offers to optimise price, conditions and timeline.