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Home Resources M&A Glossary Non-Binding

M&A Glossary

Non-Binding

Having no legal or binding force.

Tips

Non-binding is normally used in the context of a non-binding letter of intent (LOI). Technically some clauses in the LOI are binding, such as a clause regarding confidentiality; however, other clauses, such as those relating to purchase price, are intended to be non-binding. Some letters of intent include the binding and non-binding clauses in separate sections so there is no doubt as to which clauses are binding. Note that some courts, however, have interpreted a letter of intent to be binding, even though the parties intended it not to be so.

Related Resources

M&A Basics | The Letter of Intent

Related M&A Terms

Net Income

Amount of money earned after deducting from the gross revenues of a business all expenses, including overhead, employee salaries and benefits, manufacturing costs, inventory costs, distribution costs, and marketing and...

Non-Compete Agreement / Non-Competition Agreement

A contract that limits the seller or key employees from competing with the business after the closing. See Also Key employee, non-solicitation agreement Tips It’s important for the seller to...

Non-Disclosure Agreement (NDA) / Confidentiality Agreement (CA)

A legal contract between at least two parties that outlines confidential material, knowledge, or information that both parties want to share with each other for specific purposes but with restricted...

Non-Operating Assets

Property or goods owned by a company that are not necessary to the ongoing operations of the business enterprise. Tips A seller can often dispose of non-operating assets in the...

Non-Operating Income

Income or revenue not related to the typical activities of the business. Example Income from an insurance settlement or lawsuit, or gains from selling a piece of real estate.

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