Receiving an off-market approach to buy your business can be flattering – and exciting. Out of the blue, someone sees the value in what you’ve built and wants to acquire it. But before you jump headfirst into a conversation or deal, it’s important to pause, assess the situation carefully, and consider your options. An unsolicited approach doesn’t automatically mean it’s the best deal or the right path forward. Here’s how to think it through.

Will This Approach Value Your Business Properly?

The first question to ask yourself is whether this approach will reflect the true value of your business. If you’ve only had interest from a single party, it’s unlikely you’ll know what the market is truly willing to pay.

Without competitive tension – where multiple buyers bid for your business – there’s little incentive for the interested party to make their best offer upfront. Their goal may be to secure a deal at the lowest price possible, especially if they know you haven’t explored alternatives. Even if the number looks appealing at first glance, without proper benchmarking, how can you be sure it’s fair?

At this stage, it’s worth getting an independent valuation from a trusted advisor. They can assess the financials, market conditions, and comparables data to give you a clearer picture of what your business is really worth.

Should You Conclude the Transaction Quickly?

There’s often an unspoken sense of urgency when an off-market offer is made. The buyer may say they want to conclude the transaction quickly, presenting this as a benefit to you: minimal disruption, less time-consuming negotiations, and a straightforward process. While speed can be tempting, it’s rarely in your best interest to rush.

A quick sale might save time, but it also means you lose the opportunity to test the market. A competitive process – where multiple buyers are engaged – can drive up the price and improve the terms of the deal. Without that competitive pressure, the buyer holds all the cards, and you could leave significant value on the table.

However, if the interested party is strategic – such as a competitor or investor who truly understands your business – they may see value others wouldn’t and be willing to pay a premium to secure the deal quickly. This can sometimes justify bypassing a broader sale process, but only if their offer is independently verified as strong.

How Can You Conclude the Transaction Efficiently?

If you decide to engage with the off-market approach, efficiency is key. Start by bringing in a professional team – financial advisors, legal experts, and tax specialists – to guide you through the process and ensure your interests are protected.

• Negotiate Exclusivity Carefully: If the buyer requests exclusivity to conduct due diligence, limit this period to avoid being tied up indefinitely.
• Prepare Your Information: Ensure your financial, legal, and commercial information is in order to streamline the buyer’s due diligence process.
• Focus on Terms, Not Just Price: While price is critical, don’t overlook other deal terms – payment structure, future involvement in the business, or protections for your team.

Having the right advisors in place will allow you to manage negotiations professionally, keep the process moving, and reduce risks.

Is There an Advantage to Avoiding a Full Process?

There are scenarios where concluding a deal off-market can make sense. For example, if the buyer is highly strategic, the deal terms are strong, and you trust their vision for the business, then avoiding a lengthy, competitive process can save time and limit distractions. This is particularly relevant if your business is performing well, and you don’t want a drawn-out sale process to impact momentum.

However, in most cases, launching a full process will help you maximize value. A broader market process creates competition, puts pressure on buyers to present their best offers, and gives you greater confidence that you’re achieving the best outcome.

Final Thoughts

An off-market approach can be exciting, but it’s important to stay calm and strategic. Before committing to anything, get an independent valuation to ensure you understand what your business is worth. Be cautious about rushing the process, and consider whether engaging other potential buyers could drive a better deal.

If you choose to proceed with the interested party, surround yourself with trusted advisors to guide the process efficiently and protect your interests. Remember, selling your business is likely a once-in-a-lifetime event – taking the time to get it right is worth it.