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Approached with an Unsolicited Offer to Buy Your Business? How to Avoid Wasting Your Time

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Have you received unsolicited offers from prospective buyers of your business? In this article, we will lay out Objective’s strategic business selling strategy and provide detailed examples of how to implement it in your business to help you separate promising offers from those that aren’t worth your time. 


Objective’s 3-Step Process for Navigating Unsolicited Offers


Step 1: Set Your Number Based on both Financial and Non-Financial  Goals

Every business owner should know their number prior to considering any offers to sell.  Arriving at your number is complex and includes understanding the current trends in your sector, your company’s growth potential, tax implications, and the pros and cons of selling now versus waiting a few more years. 

The 2AM Solution: Evaluating Non-Financial Aspects of Your Number

Once you’ve determined the financial aspects of your ideal selling price, it’s time to reflect on the personal implications. Strategic business selling includes evaluating your non-financial objectives because they are equally important as the financial aspects. 

We advise our clients to engage in a “2 AM  contemplation” to help them explore the financial and non-financial impacts of selling  their business. This activity begins with imagining yourself in the quiet of the night, two years from now, staring at your reflection in the mirror, after the initial excitement wears off.

Ask yourself:

  • Will you feel content and confident about the decision you made regarding the sale of your business? 
  • How did the buyers treat your employees and customers?
  • What do you do with your time now?
  • How did the sale impact your legacy?
  • How does the sale and buyer affect the company’s legacy?

There are no right or wrong answers to these questions. The key is to have a very good initial understanding of what must be true for this transaction to make sense. 

While deeply involved in the daily operations of your company, it can be challenging to gain clarity on the broader aspects of selling. By working with an unbiased advisor skilled in the process of selling a business, you can sleep better knowing that crucial non-financial facets aren’t overlooked.

Why focus on the non-financial aspects of selling your business this early in the M&A process? 

Our extensive experience shows business owners rarely discuss the numbers after the sale. They talk about how they feel and what their new life is like. We continually assess if this is the right deal, the right time, and the right buyer for you. Our innovative M&A consulting services focus on more than the numbers. We help you transition from being a 24/7 business owner to your dream life. Our personalized and in-depth process requires a hands-on approach you won’t find in traditional agencies.


Step 2: Aggressively Disqualify Buyers

Acquirers know that approaching more businesses increases their chance of crafting a deal with high returns. It benefits them to explore as many potential deals as possible, but the same is not true for you. Because engaging with every offer is time-consuming, it can pull you away from the day-to-day operations, negatively impact your bottom line, and decrease your valuation.

Instead, you’re looking for the best-fit companies who understand your industry and how acquiring your company is a strategic advantage. 

The two types of buyers you may want to consider engaging with are the highly reputable big names that everyone in your industry looks up to or private equity firms with at least one company that looks like yours. This is because there’s a higher probability that these buyers are serious and understand your company’s value. 

Even if you aren’t planning to sell right now, begin building relationships with those two categories of buyers. Your goal is to create a mutual qualification process where you and the buyer have the information you need to continue the conversation. 

Objective’s strategy for this stage is significantly different and more effective than other M&A consulting services. Instead of pushing the number of conversations down the road several weeks (or months), we help our clients start them now. Shying away from sharing revenue or EBITDA drags out conversations with buyers who aren’t going to pan out. 

Monday Morning Conversations

If you’re both still on board after sharing initial numbers, it’s time to have Monday morning conversations. Help the buyer think past the acquisition. Asking questions about what it might look like helps the buyer see if there’s a great fit, which can lead to premium offers. These atypical conversations also help you look for signs that this buyer isn’t a great fit. 

Here’s an example of a conversation with the buyer that sets the hook and then aggressively disqualifies those who aren’t worth your time: 

“I love how our conversations are going, and I want to let you know we are executing a three-year growth plan in the middle of implementation. We are really excited about how that’s going and where we are headed. 

However, our conversations show an exciting partnership opportunity, so I am willing to preempt our growth plan to explore this. We’ve been getting a lot of incoming interest, but I think the opportunity you present is unique. 

That being said, because we are on this three-year growth plan, if we were considering a sale today, the number would likely need to be this figure or higher. If you’re willing to entertain that, then I’m willing to continue the conversation. If you’re not, let’s wait and see if the timing is better down the road.”

Your goal here is to highlight the potential growth and set a floor instead of a value ceiling.

Your number is higher than the low end of the financial metrics of your EBITDA or ARR (annual recurring revenue). You’re setting the stage for a premium and weeding out people who won’t be willing to pay this price before you waste three to six months of conversations. 

Those who aren’t qualified now will likely keep an eye on your growth over the next few years and become more familiar with your value proposition. Knowing more about your company, rate of growth, and the impact you have in your sector increases the likelihood they’ll jump at a higher valuation. 


Step 3: Continued Validation of Prospective Buyers

It’s a common error to stop asking if the buyer is a good fit once you’ve moved past the initial disqualification phase. This mistake can significantly reduce your ability to negotiate an offer that meets both financial and non-financial goals for selling. Unlike traditional M&A consulting services that skip this step, Objective runs an agile process to make sure this is the right buyer for your company.

It starts with engaging the buyers who don’t balk at the buy-now floor price you presented. They will want to know more about your numbers, track record, and potential. Objective’s innovative strategic business selling process helps you focus your conversation on the future benefits they’ll get from acquiring your company. 

Instead of solely presenting your past successes, we highlight the synergies of the buyer gaining access to your product, services, proprietary technology, processes, buyers, employees, and reputation. Objective’s advisors leverage our extensive M&A experience and industry-specific expertise to build a strong case for premium valuation during these post-economic acquisition conversations. 

Starting these conversations before the offer helps the acquirer develop a greater degree of confidence in the positive financial impact of buying your business. Increasing the buyer’s perceived value of your business increases your chance of a higher price.

How Objective Helps You Navigate Unsolicited Offers

M&A opportunities are increasingly more common for successful businesses. To make the best decisions, you’ll need an advisor who knows how to disqualify offers that will otherwise waste your time, tell your business’s story, and coach you through the process. Objective’s M&A advisors understand market dynamics, your unique industry, buyers’ motivations, and how to position your business as the solution to their problems. 

We tell your story in a way that proactively addresses a buyer’s most common objections to premium valuations.

Objective’s team brings the industry-specific knowledge and unique data-driven process you need. We’ll help you highlight the hidden gold in your company that traditional M&A advisors sometimes miss. Objective’s expertise also allows us to share industry trends and opportunities that prospective buyers didn’t know to ask about. 

When you receive unsolicited emails from potential buyers and need clarification on your next steps, contact Objective. Our team of experts can guide you through this intricate journey, from determining your number and goals to making informed decisions to negotiating premium values and facilitating post-sale integration. 

Need help deciding how to respond to a potential buyer and weed out the ones that aren’t serious? Reach out today to schedule a call with Objective. 


Trever Acers

Managing Director, Investment Banking

Trever has 20+ years of investment banking, acquisition, and strategy experience advising middle market companies on transaction execution and strategy. Mr. Acers has a MBA from the UCLA Anderson School of Management with a finance concentration and a bachelor’s degree with high honors in business administration from the University of San Diego. 

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Disclosure

The above testimonials may not be representative of the experience of other customers and past performance is not a guarantee of future performance or success.

This news release is for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. Principals of Objective Capital are Registered Representatives of BA Securities. Objective Capital Partners and BA Securities are separate and unaffiliated entities.

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