Purchase Offer
Formal document by which a buyer proposes to acquire a business on specific price, structure, and timeline terms. Can be conditional or firm.
Definition
A purchase offer is a document through which a buyer formally expresses their intention to acquire your business at a specified price and under specified conditions. Unlike a letter of intent (LOI), which is generally non-binding, a purchase offer can carry legal weight and bind the parties, depending on how it’s drafted.
In French-language Quebec documentation, you’ll see offre d’achat used for the same concept.
It’s important to distinguish three levels of commitment in a sale process: the indication of interest (very preliminary, non-binding), the letter of intent (semi-formal, partially binding), and the purchase offer (formal, often binding subject to conditions).
Why the purchase offer matters in a business sale
Receiving a purchase offer is a pivotal stage in the sale process. It’s the moment when discussions move from the theoretical to the concrete. The document sets out not only the proposed price but also the transaction structure — cash at closing, vendor take-back, earn-out, allocation between assets and shares — as well as the conditions that must be met before closing.
A “firm” offer means the buyer commits to purchase without major conditions precedent. In practice, most offers on Quebec SMEs are conditional: they’re subject to due diligence, financing, board approval, or review of key leases and contracts. Understanding which conditions are reasonable and which hide an escape hatch is essential to avoid wasting time.
The price shown in an offer isn’t always the price you’ll actually receive. Structure matters as much as the amount: a $2M cash-at-closing offer can be worth more than a $2.5M offer where 40% is paid over five years with a conditional earn-out.
What every seller should know
- Don’t compare offers on price alone — analyze the structure, conditions, closing timeline, and the buyer’s financial strength.
- An offer conditional on financing means the transaction isn’t certain until the bank approves the loan — ask for proof of pre-approval.
- Have any purchase offer reviewed by your lawyer and your broker before signing anything, even an acknowledgment of receipt.
- A competitive process (multiple buyers) improves your chances of receiving stronger, better-structured offers.