Price is a range, and a starting point
A non-binding offer gives an enterprise value, often as a range, based on the information memorandum and before due diligence. It is neither a commitment nor a prediction of the final price. What it tells you is how the buyer values the business today and how much room they have left themselves to move.
Two offers at the same headline value can lead to very different outcomes. The useful reading is in the pages after the number.
From enterprise value to what shareholders receive
Enterprise value becomes equity value through a bridge: net debt, debt-like items, working capital adjustments, transaction costs. Buyers define these terms differently, and the differences can be material. An offer that is generous on enterprise value and aggressive on what counts as debt may end up below a more conservative one.
Reading an offer means asking what the buyer considers debt-like (deferred revenue, earn-outs, provisions, employee liabilities), what working capital level they assume is normal, and whether they have stated these assumptions at all.
Structure: cash, deferred, rolled
How much is paid at closing, how much is deferred or conditional on future performance, and how much shareholders are asked to reinvest alongside the buyer. An earn-out can bridge a valuation gap, but it transfers risk to the seller and depends on definitions that will be negotiated line by line later. A reinvestment aligns interests but changes the nature of the transaction.
A founder should read the structure as a statement of what the buyer believes about the business: the more conditional the price, the less convinced the buyer.
Certainty: financing, approvals, conditions
Who is paying and with what. A strategic acquirer paying from cash on hand, a sponsor with committed fund capital, or a buyer who still needs to arrange debt financing present very different risks of a deal not closing. Internal approvals, antitrust or regulatory filings, and conditions precedent to closing are the other sources of uncertainty.
In a competitive process, certainty is a currency. A slightly lower offer from a buyer who can sign in eight weeks is often worth more than a higher offer with financing still to be arranged.
Diligence scope and timetable
Serious buyers say what they still need to see and how long they need to see it. A short, specific list of outstanding items indicates a buyer who has done the work; a vague request for full access and an open-ended timeline indicates one who has not.
The timetable matters for the seller too. Every additional month of process is a month of management attention away from the business, and a month during which the numbers can move.
People and the plan
Finally, what the buyer intends for management, employees, the brand and the product. Not every founder weighs this the same way, but it is in the offer, implicitly or explicitly, and it is easier to negotiate before exclusivity than after.
The number on the first page is the start of the conversation, not the conclusion.