How to make an offer on a business for sale

An offer on an Australian business is usually made in two stages: a non-binding letter of intent setting out proposed price, terms and conditions, then a legally binding letter of offer with the final terms, after which a purchase contract is drafted. Business Queensland states that a deposit of 10% or more of the purchase price is typically expected. The conditions you attach — subject to finance, subject to due diligence, subject to the landlord agreeing to transfer the lease — are what let you walk away, so they matter more than the headline number.

By the bizflip team · Published 2 September 2026 · Facts checked 2 September 2026 · Sources listed below

Making an offer on a business is not one document. It is usually a sequence: an informal indication of interest, then a written offer setting out price and conditions, then a contract of sale drafted once that offer is accepted. Which of those actually binds you is the thing to be clear on before you sign, because the answer changes from document to document.

Where the offer sits in the process

An offer does not come first. In a normal Australian business sale it lands roughly here:

Enquiry on an anonymised listing.
Confidentiality agreement, and usually some evidence you can afford the business.
Release of the real information — financials, lease, staff structure.
Your offer, with conditions attached.
Due diligence.
Contract of sale.
Settlement and handover.

You will normally have seen headline financials before you offer, but not the full detail — that is what due diligence is for, and it is exactly why an early offer is made conditional rather than final. What an NDA does before financials are shared covers the step immediately before this one.

Letter of intent, letter of offer, contract

Business Queensland describes the offer process in two documents. First a letter of intent, which sets out the proposed terms and conditions and the timing of the sale. It should be non-binding, include the basic terms, state whether the offer is subject to a trial period, finance or a satisfactory lease, and precede a final contract. It can also include a lock-out or exclusivity period.

Second a letter of offer, which Business Queensland describes as a legally binding document containing the key elements of the letter of intent as amended by negotiation, with the final price, terms and conditions of sale. It has to be accepted by the seller for the sale to proceed. Only once it is accepted does a purchase contract get drafted.

Terminology varies. Brokers may ask for an expression of interest, an indicative offer or a heads of agreement. The label matters much less than what the document says about whether you are bound, so read that clause first and have a solicitor confirm it. Business Queensland notes brokers generally have a letter-of-offer template, and recommends working through it with your own solicitor rather than signing theirs unread.

So is an offer binding?

It depends entirely on how it is drafted. A letter of intent is normally written to be non-binding on price, while some clauses inside it — confidentiality, exclusivity, who pays costs — are often intended to bind. A letter of offer, once accepted, is intended to bind. Treating a signed document as a formality is where buyers get into trouble: if you do not want to be committed, the document has to say so, in terms.

What the conditions actually do

Conditions are the mechanism that lets you exit without breaching the agreement. The common ones:

Subject to due diligence — you can terminate if something material turns up. Business Queensland notes a due diligence period written into a signed contract is generally limited to five to ten business days, so negotiate a realistic period before you sign, not after.
Subject to finance — you can withdraw if your lender does not approve the loan. Be specific about the amount, the lender and the date, because a vague finance clause is hard to rely on.
Subject to a satisfactory lease — for a business tied to premises this is often the most important condition. The landlord has to agree to transfer the lease into your name, and a short remaining term changes what the business is worth.
Subject to a trial or inspection period — time working in or observing the business before you are committed.
Subject to key contracts transferring — where a few customer or supplier agreements carry the earnings and need the counterparty's consent to be assigned.

Each condition should have a date attached. An open-ended condition is a problem for the seller, and a seller with other interested parties will push back on it.

Deposits

Business Queensland tells sellers to negotiate the deposit, and states that a deposit of 10% or more of the purchase price is typically expected. It also notes that even after securing a deposit, a broker or agent can continue showing the business to other potential buyers — so paying one does not by itself take the business off the market. Exclusivity is a separate term you have to ask for.

Ask three questions before you pay: who holds the money, on what terms is it refundable, and what happens if a condition is not met. Where a licensed agent holds it, client funds go into a trust account — in NSW, licensees under the Property and Stock Agents Act 2002 must hold clients' funds in a trust account and follow trust account management and audit rules. A deposit paid straight into a seller's own account has none of that protection.

What an offer sets besides the price

Settlement date — the seller may want a quick exit while you need time for finance. Business Queensland flags this as a genuine negotiating point on both sides.
Handover and training — sellers commonly stay on for three to twelve months, paid as a management employee, to transfer relationships and know-how.
Restraint of trade — a covenant that the seller will not open a competing business. Business Queensland recommends a solicitor draft this clause.
Stock — whether inventory is included in the price or counted and paid for separately at settlement.
Employee entitlements — whose cost accrued leave is. This is a real number and it belongs in the offer, not in a surprise at settlement.
Warranties and indemnities — Business Queensland advises buyers to get specific protections from the seller before signing, covering matters such as underpaid wages, unpaid superannuation or disputes with creditors.

One state requirement to check

In Victoria, a statement by a vendor of a small business under section 52 of the Estate Agents Act 1980 is required for the sale of a small business at a price up to $450,000. Consumer Affairs Victoria publishes the prescribed form, usually completed by the seller and their accountant. Disclosure obligations differ between states, so ask your solicitor what applies where the business is located before you put an offer in writing.

Pitching the number

Business Queensland treats an asking price supplied by a seller or broker as a starting point for negotiation, and recommends working with your accountant to establish a fair value range from the financial documents before you offer. It puts the discipline plainly: be clear on a price you can personally afford, could obtain finance for, are willing to pay, and that realistically reflects the value of the business.

Ground the number in earnings rather than in the asking price. How much a business is worth explains the multiple-of-earnings method most Australian small business sales use, and business valuation multiples by industry shows the reported ranges by sector. If your offer sits below the asking price, saying which assumption you disagree with — the earnings figure, the multiple, the durability of a customer relationship — will move a seller further than a bare number.

Then verify it. Due diligence before buying a business covers what happens once the offer is accepted, and it is where an offer either firms up or gets renegotiated.

To check an asking price against the business's own earnings before you write an offer, bizflip's valuation calculator is free and publishes its methodology.

Sources

Every load-bearing claim in this guide, and where it comes from:

Business Queensland's offer process: a non-binding letter of intent setting out proposed terms, timing, and whether the offer is subject to a trial, finance or satisfactory lease, optionally including a lock-out or exclusivity period; followed by a letter of offer, described as a legally binding document containing the final price, terms and conditions of sale, which must be accepted by the seller before a purchase contract is drafted. Brokers generally have a letter-of-offer template that buyers should work through with their own solicitor. An asking price from a seller or broker is a starting point for negotiation, and buyers should work with an accountant on a fair value range. — Business Queensland (Queensland Government)
A deposit of 10% or more of the purchase price is typically expected, and a broker or agent can continue showing the business to other potential buyers even after a deposit is secured. Settlement timing, a handover of 3-12 months as a paid management employee, and a restraint of trade covenant are standard negotiating points. — Business Queensland (Queensland Government)
A due diligence period included in a signed sales contract is generally limited to 5-10 business days, and buyers should obtain specific warranties and indemnities from the seller before signing, covering matters such as underpaid wages, unpaid superannuation and disputes with creditors. — Business Queensland (Queensland Government)
Licensees under the NSW Property and Stock Agents Act 2002 must hold clients' funds in a trust account and follow trust account management and audit rules. — NSW Government (Fair Trading)
In Victoria, a statement by a vendor of a small business under section 52 of the Estate Agents Act 1980 is required for the sale of a small business at a price up to $450,000, using the form prescribed under the Estate Agents (General, Accounts and Audit) Regulations 2018. — Consumer Affairs Victoria
After valuing the business and completing due diligence, a buyer decides whether to make an offer and may need to negotiate the price; once agreed, a written contract gives the agreement legal force and outlines the final cost and payment method. — business.gov.au (Australian Government)

Ready for your own number? The valuation calculator is free and ungated, and its methodology is public.