I Received an Unsolicited Offer to Buy My Business: 5 Steps to Take Before You Respond (Copy) (Copy)
It starts with a FedEx envelope, a LinkedIn message, or a cold call to your front desk. The message is always flattering: "We have been tracking your company, we love your position in the market, and we would like to discuss acquiring your business."
For the lower-middle market business owner ($2M – $50M revenue), this moment triggers a complex mix of emotions: validation, excitement, and immediate anxiety.
"Is this real?"
"Am I leaving money on the table if I say yes?"
"Will they walk away if I hesitate?"
At SeaRidge Advisory, we counsel owners that an unsolicited offer is not a lottery ticket; it is a strategic probe. The buyer—whether a Private Equity Associate or a Corporate Development Officer—is attempting to bypass the open market to acquire your asset at a discount.
Here is the strategic playbook for converting a lowball inquiry into a premium exit.
1. The "Proprietary Deal" Trap: Why They Called You
To understand the offer, you must understand the buyer's motivation. Private Equity firms are sitting on trillions in dry powder. If they buy a company through a competitive auction (represented by an investment banker), they pay top dollar.
However, if they can source a deal directly from the owner—bypassing the advisor—they call it a "Proprietary Deal."
The Math of the Cold Call:
Auction Price: 7x – 9x EBITDA.
Proprietary Price: 4x – 6x EBITDA.
They are banking on the fact that you do not know what your neighbor sold for. They are not calling because they are "charitable"; they are calling because they are "efficient."
2. Step 1: Verify the Buyer (Real vs. Fishing)
Not all offers are created equal. In 2026, the market is flooded with "Unfunded Sponsors" and "Search Funds."
The Funded Sponsor: Has committed capital (a fund) ready to deploy. They can close in 90 days.
The Unfunded Sponsor: Has no money. They want to get you under a Letter of Intent (LOI) so they can run around to banks and investors to raise the money to buy you.
The Test: Before you sign an NDA or share a single tax return, ask for their "Tombstones" (recent closed deals) and proof of committed capital. If they cannot provide it, hang up.
3. Step 2: The "One-Way" NDA (Protect Your IP)
Buyers will immediately ask for your financials. Do not send them.
First, you must execute a Non-Disclosure Agreement (NDA). However, standard PE NDAs are often loose. You require specific protections:
Non-Solicitation: They cannot hire your key staff if the deal fails.
Non-Contact: They cannot contact your customers or suppliers.
Use Restriction: They cannot use your data to compete against you.
Strategic Insight: For manufacturers with proprietary processes, this stage is critical. Consult The Precision Firm for industrial-grade IP protection protocols.
4. Step 3: The "Anchor" Rule (Don't Name a Price)
The buyer will ask, "What is your number?" or "What are you looking to get?"
Do not answer.
This is the psychological trap of Anchoring.
If you say $10M, and they were willing to pay $15M, they will immediately agree to $10M. You just lost $5M.
If you say $20M, and they value it at $12M, they may simply walk away, thinking you are unreasonable.
The SeaRidge Response: "We are not currently on the market, but we are always open to strategic conversations. Since you approached us, please review our high-level data and tell us how you value the business." Force them to show their cards first.
5. Step 4: The "Market Check" (The Soft Auction)
This is where SeaRidge Advisory provides the highest ROI.
If the unsolicited offer is credible (e.g., $12M), we do not simply accept it. We use it as a "Stalking Horse."
We quietly approach 3–5 other targeted buyers—without listing the business publicly—and say:
"We have a credible unsolicited offer at $12M. We are going to sign exclusivity in 3 weeks. If you are interested in this asset, you need to submit a bid now."
The Result:
Buyer B bids $13.5M.
Buyer C bids $14M.
We go back to the original Caller: "The market is pricing this at $14M. If you match it, we will proceed."
You have just created competitive tension and increased your exit value by 20% without ever running a public process.
Industry Specifics:
Healthcare: For home care agencies, the "Stalking Horse" is often a large regional consolidator. Visit Home Care Business Broker.
Services: For B2B service firms, the other bidders are often Private Equity "Add-on" seekers. Visit The Alignment Firm.
6. Step 5: Hire a Buffer (The Bad Cop)
Selling a business is emotional. Negotiating the sale of your life's work requires clinical detachment.
If you negotiate directly, you risk damaging the relationship with the buyer—who might be your future boss if you roll equity.
The Advisor's Role: We are the "Bad Cop." We push for higher multiples, stricter terms, and working capital adjustments.
The Owner's Role: You remain the "Good Cop," focused on the future vision and operations.
Conclusion: An Offer is Just an Opinion
An unsolicited offer is simply one buyer's opinion of your value. It is not the truth. The truth is only discovered when multiple buyers compete for the asset.
If you have received an offer, do not sign the LOI yet. Contact SeaRidge Advisory immediately. We can review the offer, determine if it is market-rate, and help you decide if it’s time to execute a "Pocket Listing" strategy to maximize your wealth.
Frequently Asked Questions (FAQ)
1. What is a "Pocket Listing"?
A pocket listing is when an M&A advisor markets your business to a small, hand-picked group of buyers (usually 5–10) without posting it on public websites. This maintains strict confidentiality while still generating competitive bids.
2. Should I tell my employees about the offer?
Absolutely not. Uncertainty kills morale. If employees fear a sale, they may start looking for new jobs. You should only disclose the sale after the deal is closed and the wire transfer is confirmed.
3. How long is an unsolicited LOI valid?
Buyers often put a short expiration (e.g., 48 hours) to pressure you. This is a tactic. A serious buyer who wants your specific asset will wait for you to seek legal and financial counsel. Never rush the signature.
