An indicative offer is typically used during the early stages of a business acquisition, once you have reviewed enough initial information to assess its potential value but before completing full due diligence. It allows you to communicate your proposed purchase price and key conditions without immediately committing to a final transaction. Indicative offers are generally non-binding, subject to their wording.
There are three important considerations:
- Timing: Submit an indicative offer after reviewing initial financial information, understanding the business's operations and establishing a preliminary valuation.
- Offer details: Include the proposed price, acquisition structure, funding approach and any important assumptions or conditions.
- Next steps: If the seller is interested, the parties may proceed to more detailed negotiations, agree Heads of Terms and undertake further due diligence.
For example, you might submit an indicative offer of £750,000 based on the seller's reported earnings, subject to verifying those figures and reviewing outstanding liabilities.
An indicative offer can help establish whether the buyer's and seller's expectations are aligned before either party commits significant time and resources to the transaction.
Read more: Heads of Terms in a Business Sale
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