Binding Offer

Business, Legal & Accounting Glossary

Definition: Binding Offer


Binding Offer


Full Definition of Binding Offer


A binding offer is an offer made by a bidder to acquire a target company (or seller) following the completion of the due diligence phase of a sale process. If the seller accepts the bidder’s terms, this offer becomes a formal contract between the bidder and the seller. In contrast to an indicative offer or an indication of interest, the bidder is legally bound to comply with the terms and conditions of a binding offer if it is accepted.

Following the receipt and review of non-binding indications of interest or letters of intent (indicative offers) during a sale process, selected bidders will be invited to conduct due diligence on the target company. Following the completion of the due diligence process, the purchase price and other terms outlined in the indicative offers will be confirmed or revised, and bidders will submit their respective binding offers to the seller.

If, for example, the bidder discovers negative, previously undisclosed information during the due diligence process, a binding offer may differ significantly from the non-binding indicative offer previously submitted by the same bidder. Once a binding offer is accepted by the seller, the bidder is bound by its terms and conditions.


Related Phrases


Indicative Offer
Expression of Interest
Due Diligence


Cite Term


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https://payrollheaven.com/define/binding-offer/
Modern Language Association (MLA):
Binding Offer. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
June 27, 2022 https://payrollheaven.com/define/binding-offer/.
Chicago Manual of Style (CMS):
Binding Offer. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/binding-offer/ (accessed: June 27, 2022).
American Psychological Association (APA):
Binding Offer. PayrollHeaven.com. Retrieved June 27, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/binding-offer/

Definition Sources


Definitions for Binding Offer are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th January, 2022 | 18 Views.