What to Do if a Buyer Approaches Your Company With an Offer

For many companies, it’s the manifestation of a long-held dream: a buyer approaches you with an unsolicited lucrative offer. It’s easy to start spinning your wheels on how easy everything will now be. The reality is that even unsolicited offers require quite a bit of work to manage. And an offer that seems too good to be true absolutely is. You’ll almost always get a higher final price, as well as better deal terms, when deal-making is competitive. This is never the case when you accept the first offer you get from the first buyer.

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So what should you do when a buyer comes knocking at your door? 

1. Consider your business and personal goals. How does this deal fit into your plan? Are you ready to retire or move on? Have you done everything with your business that you wanted to? Don’t jump ship at the first opportunity if there’s no compelling reason to do so. 
2. Hire an M&A advisor. You need an outsider to review the deal terms, assess your business, and help you decide whether this is a good deal. Even if the deal is ideal, you’ll still need help hammering out deal terms to ensure you get the fairest possible outcome. Your M&A advisor helps level the playing field when you sell your business. 
3. Make sure you have reliable financial statements readily available. Your numbers should accurately reflect an adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). This makes your business much more marketable. It also increases the likelihood that serious buyers, rather than people hoping to capitalize on naivete, will seek out your business. 
4. Do not sign a letter of intent without first asking a lawyer and an M&A advisor to review it. Once you sign this agreement, you may be wedded to specific deal terms. When the buyer writes the LOI, it’s almost never in the seller’s best interests. A knowledgeable team can help you construct a fairer, more equitable agreement.

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The right advisory team can help you assess whether your business is ready for a sale. This means that, should you ever face an unsolicited offer, you’ll know right away how to evaluate it and whether to accept it. It’s never too early to begin exit planning, but if you only just begin to think about it when there’s an offer in play, it may be too late. Work with a thoughtful team can generate real value, and ensure that leaving your business helps to fully fund your retirement dreams, whatever they may be.