Avoid accepting an unsolicited offer without checking the buyer, forming realistic value expectations and obtaining appropriate advice. Compare payment terms, funding and completion risks rather than judging the proposal on headline price alone.
By Tony Vaughan · Published · Last reviewed
Receiving an offer from someone who is interested in buying your business is an exciting time and a great accomplishment for any business owner…
However, it is important that you don’t get caught up in all the excitement. Make sure you think clearly and strategically about the upcoming process so that you can achieve the best possible outcome. Here are some common mistakes to avoid when someone offers to buy your business:
- Mistake 1: Rushing to accept the first offer you receive
Assess the first approach before committing
After working tirelessly to build your business and then deciding to sell, there is no better feeling than when you receive your very first offer. It’s good news, as someone else has recognised the value and potential of your business. While taking the first offer you receive might be tempting, there is a good reason to take a step back and practice some strategic patience. Strategic patience allows you the time and space to give yourself enough time to stop and think before making your next move. It is important to consider who else might be interested in your business and what value it might have to them. Give yourself the time to play the competitive tension card, that little bit of negotiation magic which happens when you have two or more serious buyers interested in acquiring your business. If you are looking for a quick sale, strategic patience is not your friend, as you will start the process with an immediate negotiation disadvantage, and it will take some effort to climb that hill and negotiate from a position of strength. If you prepare and plan early for your business exit you are unlikely to need to seek a quick sale, which leaves you at the mercy of bargain hunters. You will need good support and a proven marketing process to give you the confidence to either take the opportunity to negotiate or hold out for a few comparable offers. Never be afraid to walk away from a negotiation, as this will allow you greater control during the process and directly increase your chances of securing the best deal for your business.
- Mistake 2: Unrealistic Price Expectations
A valuation provides an estimated range based on financial performance, market evidence and stated assumptions. It can inform price expectations but does not establish a guaranteed sale price. Competing buyers may improve terms, although an offer-based process does not necessarily outperform a priced sale.
- Mistake 3: Doing it alone
An adviser can help prepare information and manage negotiations, but appointment is a cost-benefit decision. Compare relevant experience, fees, conflicts and responsibilities before choosing support.
A business sale professional may identify potential buyers and help manage negotiations and confidentiality. Their involvement does not guarantee competing offers, a higher price or a completed sale.
Common questions
What should I check before replying to an unsolicited acquirer?
Confirm the identity of the buyer, its acquisition rationale and evidence of funding. Use confidentiality arrangements before sharing sensitive information.
Does a first unsolicited bid establish my company’s market value?
No. It is one buyer’s proposal on particular assumptions and terms, not an independent assessment or a completed transaction.
Should I appoint the adviser who quotes the highest sale estimate?
Not on that basis alone. Compare relevant experience, valuation evidence, conflicts, fees and the scope of the engagement.
Can I seek other bids after an acquirer approaches me?
Usually, unless you have agreed restrictions such as exclusivity. Have a solicitor review any obligations before approaching other buyers.
Sources
General information from our archive, not personal advice.
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