The danger of unsolicited offers: What business owners need to know

Scott Bushkie

Guest Columnist

November 4, 2024

One of the scariest situations I have seen in M&A is when business owners accept unsolicited offers.

You’ve poured years, if not decades, into running your business, and then out of nowhere, someone shows up, says all the right things and makes an offer that seems hard to refuse.

It’s flattering.

It feels like validation of everything you’ve worked for.

But here’s the catch: You’re only looking at one offer, and that’s a dangerous place to be.

In our industry, there’s a saying: “One buyer is no buyer.”

Without a competitive process, you’ll never know what your business is truly worth.

Over the last few years, we’ve averaged five offers per client.

That’s five opportunities to compare terms, values and cultural fit.

Why unsolicited offers are so common

There’s a reason why companies and private equity firms aggressively pursue unsolicited offers. 

They know they’re more likely to get a better deal when negotiating one-on-one, without representation.

If that weren’t the case, they wouldn’t bother.

They’d sit back and wait for deals to hit the open market, but they don’t.

Instead, they spend time, energy and resources to get in front of you before you have a chance to weigh your options.

They know that if you engage a firm, their offer will usually look less appealing.

The success of a competitive process

Four years ago, we put together a strategy to combat unsolicited offers.

And to date, we’ve never lost the original buyer – but here’s the kicker – they’ve never been the final buyer either.

Every single time, our clients have chosen a different buyer, one who offered more value, a better structure, more cash at close and a stronger cultural fit.

Every time.

So though it’s flattering to have someone express interest in your business, it’s crucial to remember that the first offer is rarely the best fit.

The process of selling your business is too important – too financially significant – to take the first offer that comes along.

The risk of sharing too much

Even worse, I’ve seen sellers make costly mistakes when dealing with unsolicited offers, especially when competitors are involved.

They get flattered, they get comfortable and suddenly, they’re giving away valuable information – pricing, customer lists, margins – without even realizing it.

Competitors love this.

They’ll lowball you, knowing they now have insights that give them an unfair advantage.

If you’re reading this thinking, “I’d never make that mistake,” be careful.

It’s easier than you think, especially when you’re getting burned out and eager to see your path to freedom.

The offer looks like a streamlined way to exit your business, but you may unknowingly be giving up control and value without realizing it.

One shot at the biggest deal of your life

You only sell your business once.

As a business owner, you’re going up against professional buyers – teams that have done this dozens, maybe even hundreds of times.

They know all the tricks, all the strategies and all the ways to maximize their advantage.

You, on the other hand, are going into this with one shot – the largest financial transaction of your life.

When that offer letter comes in or the phone call happens, you don’t have to say no.

But what you do need to do is assemble a team around you who can help you make an informed decision.

Otherwise, you could leave millions of dollars on the table.

Real-world example: The $25 million near-miss

We recently completed a transaction where the client was approached with an unsolicited offer. 

Had they accepted that offer, they would have left $25 million on the table.

That’s the difference a competitive process makes.

That’s what you risk when you go it alone.

So though it’s tempting to listen to that first buyer knocking at your door, I encourage you to take a step back.

The unsolicited offer might feel like the right move, but in most cases, it’s not.

Bringing in a team who knows how to run a structured sales process could mean a better price, better terms and better protection for your employees and your legacy.