Unsolicited approaches are all-too-common in Australia too, so we thought we’d share our European colleague John Willcox-Jones’ advice on how to evaluate and handle unsolicited offers.
Despite difficult COVD-19 dominated market conditions there are still more quality buyers than there are good companies to buy. Some buyers understand this and use it to their advantage. They are keen to find businesses that are not for sale and situations where they have no competition, in an attempt to end up with a better “deal”. Smart sellers should also understand this.
Business owners often receive introductions along the following lines:
“We represent a major company in your industry with significant resources. Our client has been impressed with the quality of your operation and has asked us to inquire if we may meet to discuss a possible acquisition.”
It sounds tempting but there are numerous pitfalls. There may not even be a serious buyer on the other side at all. Weeding out the tyre kickers, time wasters and bottom fishers is a particular skill in itself.
Given how valuable your business is to you, it is imperative that you progress a transaction on your own terms. You must decide your own personal, family and financial requirements to ensure that ownership, operation, competition, and risk exposure issues are all understood. In addition, since acquirers are most concerned with future value, it is vital that owners are in a position to articulate qualitatively and quantitatively their own vision of the future.
Potential buyers will tell you that the process will be quick and your customers and staff will not become aware until it is completed. They will assure you that they can fast track this emotional process.
This is rarely the case and even so, since when has “selling it quick” been the object of the sale of your business that you have built with great care and attention and represents a significant portion of your personal net worth?
Progressing with an unsolicited offer often causes a more disruptive process, a lower ultimate valuation, an unattractive payment structure and relinquished negotiating leverage.
An unsolicited offer to buy your business may cause you to stop, think, and re-evaluate. If you believe the time is right or soon will be, seek advice from someone with deep experience of business sales and work with them to create the proper path to a smooth exit process for you, your family and all the stakeholders.