In short
- Confirm who the buyer is and wait for a signed NDA before sharing information or an asking price.
- An approach from one buyer is a signal that others may be interested. Testing that is usually worth the time.
- Avoid exclusivity until the price, structure and the main terms are clear.
Find out who is asking, and why
Start with simple questions. Is the approach from a competitor, a supplier, a private equity fund or an intermediary acting for someone else? What does the buyer already own, and why does your company fit? A strategic buyer looking for synergies and a fund looking for a platform will value the business differently and will want different things from you after closing.
Protect your information
Share financial statements, customer lists and contracts in stages after signing a confidentiality agreement. A competitor can learn a lot from a discussion that never leads to a deal.
Think too about who inside the company needs to know. Most owners keep an approach confidential from staff, customers and banks until the outcome is clearer.
Let the buyer make the first offer
Buyers often ask early what you want for the business. Your answer can anchor negotiations below what they might pay. Ask for an indicative offer based on the information you have agreed to share. Compare it with your own valuation.
Test the market before you commit
One approach can signal interest from other buyers in the sector. A short, discreet process with a few selected buyers shows how the first offer compares. Competition is the most reliable way to improve price and terms. It also reduces the risk of running out of options if one buyer withdraws late.
Be careful with exclusivity
Buyers often ask for exclusivity before investing in due diligence. Grant it once the letter of intent sets out a price, structure and terms you are comfortable with. Clarify cash at closing, deferred payments, earn-outs and any stake you keep. Exclusivity limits your alternatives, so define its scope and duration.
Choose an adviser who represents you
The buyer will have advisers and lawyers and will often have completed several acquisitions. You may only sell once. An adviser who works for you alone can manage the process, keep discussions going without committing you and say whether the approach is worth pursuing.
Find buyers for your companyGet a free list of potential buyers for your company.Get the list