We are evaluating an established internet services business based in Atlanta, GA. According to the broker, we need to enter a non-binding offer. We haven't seen complete financials or conducted any due diligence. We suspect the price is too high and we're afraid we're going to realize in due diligence that this isn't the business we want. They are expecting another offer, but they do not like this potential buyer.
You make an offer with express contingencies that are required to be fulfilled prior to close that if they are not fulfilled entitle you to a walk away.
The offer is (or should be) non-binding. So, you would be making the offer based on some assumptions that may or may not turn out to be true, although I would question what the offer price is based on.
Either way, have your attorney review the offer before submitting it to make sure that you are protected.
You need to retain an experienced Business Attorney to make sure that any non-biding offer is just that. Typically, you would sign an NDA and then do your due diligence before making a formal offer.
The foregoing discussion does not establish an attorney-client relationship, is qualified by the limited facts presented above, and should not be relied upon as legal advice. To obtain definitive legal advice upon which one can rely necessitates retaining an attorney who is qualified in this particular area of the law.
A non-binding offer is just that, non-binding. Either party can withdraw at any time. It is necessary however because it is what starts the true negotiations and the the due diligence investigation of what you are buying.
They may or may not like the other potential buyer but when push comes to shove, they will probably like his money if it is appreciably more than yours.
The non-binding offer is your foot in the door. "Would you be willing to consider an offer of X dollars if everything else works out?" Then the real investigation begins.
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