What is a conditional offer on a business?

Very few Canadian small business offers are unconditional. A conditional offer lets a buyer commit to a price and structure now while still protecting themselves against specific risks they have not yet had the chance to check.

Why almost every offer includes conditions

A buyer signing an offer before completing full due diligence is taking on real risk, and conditions are the mechanism that manages that risk without forcing either side to wait until every question is answered before agreeing to terms at all.

The conditions that show up most often

• Financing: the buyer needs a lender, or a program like the federal small business financing program, to actually approve the loan.
• Satisfactory due diligence: the buyer’s review of financials, contracts and liabilities has to come back acceptable to them.
• Landlord consent: assigning the lease to the buyer needs the landlord’s approval, which is not automatic.
• Licence or permit transfer: any regulatory licence the business depends on has to be confirmed as transferable.
• Key employee retention: sometimes a specific manager or employee has to agree to stay on after closing.

How a condition gets satisfied or waived

Each condition has a deadline written into the agreement, and by that date it is either confirmed as met, formally waived by the party it protects, giving up the right to rely on it, or left unsatisfied, which usually allows that party to terminate the deal.

What it means for the buyer’s deposit

If a condition genuinely protecting the buyer is not met and is not waived, the deposit is typically returned. This is different from simply changing your mind; the condition has to actually fail on its own terms, which is why how conditions are worded matters as much as which ones are included.

Fewer conditions signals a stronger offer

From a seller’s side, an offer with fewer and narrower conditions, with firm deadlines rather than open-ended ones, is generally seen as more serious than one with broad conditions that give the buyer many easy ways to walk away later.