TABLE OF CONTENTS
Introduction
1 | Responding to Buyer Offers
2 | Buyer Evaluation & Diligence
3 | Seller Disclosures
4 | Seller Best Practices
5 | Top 10 Seller Negotiating Tactics
6 | Top 9 Seller M&A Mistakes
7 | Process, Timeline & Fees
8 | Sample M&A Documents
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INTRO.
A Comprehensive Guide for Business Owners
Receiving an unsolicited offer to acquire your business is a pivotal moment that demands careful consideration and strategic action. While such an offer often validates your company's success and market position, it also presents complex challenges that require expert navigation to achieve optimal outcomes.hard_break
Why This Playbook Matters
When a potential buyer approaches you unexpectedly, you're entering a high-stakes process where early decisions can significantly impact your final outcome. Our experience shows that business owners who approach unsolicited offers with preparation and strategy typically achieve valuations 20-40% higher than those who negotiate without proper guidance.
hard_breakWhat This Playbook Provides
This comprehensive resource gives you immediate access to the tools, templates, and expertise needed to evaluate and respond to an unsolicited acquisition offer effectively.
hard_breakOur playbook includes:
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Strategic frameworks for evaluating buyer credibility and offersCritical documents and templates for protecting your interestsStep-by-step guidance for maintaining control of the processProven negotiation strategies for maximizing valueExpert insights on common pitfalls to avoidhard_breakHow Exitwise Can Help
While this playbook provides valuable guidance, successfully navigating an M&A process often requires experienced support. Exitwise's team of senior M&A advisors has guided hundreds of business owners through successful transactions.
hard_breakWe can help you:
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Assess whether the timing is right for a saleEvaluate if the offer reflects fair market valueCreate competitive tension to optimize your outcomeStructure favorable terms and conditionsProtect your interests throughout the processhard_breakYour Next Steps
We encourage you to review these materials carefully. Whether you're actively considering the current offer or simply want to be prepared, Exitwise is here to help you make informed decisions that align with your objectives.
For a confidential discussion about your specific situation, contact us at hello@exitwise.com. Our team is ready to help you achieve the premium valuation your business deserves.
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Chapter 1
Responding to Buyer Offers
Receiving an unsolicited acquisition offer is a pivotal moment that requires careful, strategic action to protect your business's value and interests. This chapter provides guidance on acknowledging offers professionally, safeguarding sensitive information with NDAs, and thoroughly evaluating buyer credibility and their proposal’s components. By following structured steps and using tailored response templates, business owners can maintain control, optimize outcomes, and confidently navigate the negotiation process.
hard_breakStay Calm and Carry On
When receiving an unsolicited offer, your immediate reaction can significantly impact the eventual outcome. Take a measured approach by following these steps:
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Acknowledge receipt of the offer without making any commitments. A simple "Thank you for your interest in our company. We will review your proposal and respond appropriately" is sufficient.Resist the urge to immediately engage in detailed discussions or share sensitive information. Many owners, excited by unexpected interest, reveal too much too soon.Continue operating your business as usual. Maintain focus on performance and growth initiatives, as any disruption could weaken your negotiating position.Avoid discussing the offer with employees, customers, or suppliers until appropriate confidentiality measures are in place and a communication strategy has been developed.paragraph
To Share or Not to Share
After maintaining composure when receiving an unsolicited offer, strategically share appropriate information to enable an educated offer while protecting your business.
hard_breakInitial Information to Share (Pre-NDA)
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Basic business description and years in operationAnnual revenue for past 2-3 years and general profitability trendsHigh-level market position and growth opportunitiesNumber of employees and basic organizational structureGeneral customer segments (without specific names)Information to Withhold Initially
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Customer names and contract detailsDetailed financials and pricingProprietary technology or IPEmployee data and compensationSupplier relationshipsStrategic plansProgressive Disclosure Approach
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Pre-NDA: Public information and high-level metrics onlyPost-NDA: Detailed financials Due Diligence: Full operational and employee data and key relationshipsBest Practices
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Track all shared informationUse secure data roomsRequire signed NDAs before sharing sensitive dataMaintain consistent information across all documentsConsider engaging professional advisors for guidanceWatch for red flags like unusual urgency in information requests or reluctance to sign standard NDAs. Your best bet at this stage is to hire the best investment Banker you can find who has either transacted previously with this buyer or who has a real expertise and focus in your industry.hard_break
Understanding the Offer
Properly analyzing an acquisition offer requires systematic evaluation. Follow these steps to fully understand what's being proposed:
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Break down the offer into its key components: purchase price, payment structure, timing, conditions, and assumptions.Identify what's not addressed in the offer, such as employee retention, transition period, or earnout details. These gaps often become critical negotiation points.Analyze the proposed valuation methodology and compare it to industry standards and recent comparable transactions.Consider the offer's strategic implications, including potential synergies for the buyer that might justify a higher valuation.Document questions and areas requiring clarification to guide future discussions.hard_breakConfidential Information
Protecting sensitive information is crucial when responding to acquisition interest. Implement these protective measures:
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Execute a robust Non-Disclosure Agreement (NDA) before sharing any non-public information. Use our template NDA, which includes specific protections for M&A discussions.Create a tiered information sharing plan that gradually releases more sensitive data as the buyer demonstrates increased commitment.Maintain a detailed log of all information shared, including dates, recipients, and the context of disclosure.Mark all shared documents as confidential and use secure data room technology for digital information sharing.Establish clear protocols for verbal communications and meeting notes to maintain confidentiality.paragraph
Seriousness of the Offer and Buyer
Evaluating buyer credibility helps avoid wasting time with non-serious inquiries. Take these steps to assess the buyer:
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Research the buyer's background, including: bullet_listTrack record of completed acquisitionsFinancial capacityIndustry reputationStrategic rationale for the acquisitionRequest specific information about: bullet_listSource of fundsDecision-making processTimeline expectationsIntegration plansEvaluate the professionalism of their approach: bullet_listQuality of initial documentationComposition of their deal teamResponsiveness to communicationsWillingness to follow standard M&A processesLook for red flags such as: bullet_listReluctance to sign an NDAUnrealistic timelines or valuationsLack of clarity about fundingInsufficient deal team resourcesparagraph
Recommended Template Responses
Utilize these structured response approaches based on your initial evaluation:
hard_breakFor Credible Offers:
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Send a professional acknowledgment within 24-48 hours: bullet_listThank them for their interestIndicate you're reviewing the proposalRequest an NDA if not already executedSet expectations for next steps and timing that is most convenient for youFollow up within 5-10 business days with: bullet_listSpecific questions about their interest or proposalRequest for additional information about their organizationProposed next steps if interestedTimeline for further discussionhard_breakFor Questionable Offers:
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Send a polite acknowledgment requesting: bullet_listAdditional information about their organizationClarification of their acquisition criteriaProof of financial capacityDetails about their M&A experienceDefine clear requirements for further engagement: bullet_listExecution of standard NDAVerification of funding sourcesIntroduction to key decision-makersCommitment to professional processhard_breakFor Clearly Non-Serious Offers:
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Send a brief, professional decline: bullet_listThank them for their interestState that you're not pursuing their offerAvoid providing specific reasonsKeep the door open for future discussionhard_breakRemember: Every communication becomes part of the negotiating record. Maintain professionalism and consistency in all responses, as they may impact future discussions with this or other potential buyer.
hard_breakExitwise Success Story
How Exitwise Helped FinTech CEO Turn a $5M Offer Into a $70M Exit
Sean, the founder of a growing payroll software company, was surprised and flattered when he received a $5 million unsolicited acquisition offer from a leading public company in the payroll technology space. While the initial offer seemed significant, Sean suspected his company’s true value to this acquirer far exceeded the initial proposal. Recognizing the need for expert guidance, he engaged Exitwise to navigate the process and maximize his company’s value.
The Challenge: An Underwhelming Initial Offer
Sean's business had recently achieved significant milestones which had significant strategic value to this particular buyer. Sean also lacked experience in managing M&A processes and needed to ensure the negotiation process safeguarded his company's value and future.
Exitwise’s Approach:
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Stay Calm and Professionalhard_breaktextColor#000000Exitwise guided Sean in drafting a professional acknowledgment of the offer. Without committing to terms, Sean expressed appreciation for the buyer’s interest and outlined next steps, including the execution of a robust Non-Disclosure Agreement (NDA) before any further discussions. This calm measured response set the tone for a professional and strategic negotiation process.Protect Sensitive Informationhard_breaktextColor#000000Exitwise implemented a tiered disclosure strategy, gradually sharing relevant data while maintaining tight control over sensitive information. The team used a secure virtual data room and marked all materials confidential, ensuring Sean retained leverage while building buyer confidence.Understand the Buyer and Offerhard_breaktextColor#000000Exitwise conducted a comprehensive evaluation of the Buyer’s financial capacity, acquisition history, and strategic rationale for pursuing Sean’s company. They identified significant synergy opportunities, including how Sean’s technology could enhance the Buyer’s product offerings and generate substantial cost savings, which were not reflected in the initial offer.Evaluate Credibility and Set Expectationshard_breaktextColor#000000Exitwise ensured the Buyer’s deal team was aligned with M&A best practices, establishing clear timelines and milestones for the negotiation process. By maintaining a structured approach, Sean gained confidence that the Buyer was a serious buyer capable of completing a transaction.Develop a Competitive Positionhard_breaktextColor#000000Rather than engaging solely with the Buyer, Exitwise helped Sean identify other potential acquirers. By initiating discussions with additional parties, Sean created competitive tension, motivating the Buyer to reassess their offer to avoid losing a valuable acquisition.hard_breakThe Outcome: A $70 Million Deal
Through Exitwise’s guidance, Sean turned the Buyer’s initial $5 million offer into a $70 million exit, a 14x increase from the original proposal. The deal structure included significant upfront cash, an earnout tied to achievable milestones, and favorable terms for Sean’s team and future integration.
Takeaway
This success story demonstrates how Exitwise's structured, strategic approach and the principles outlined in this Chapter, empowered Sean to transform an unsolicited offer into a life-changing outcome. By staying calm, safeguarding sensitive information, and creating competitive tension, Sean achieved a result far beyond his expectations while preserving his legacy and positioning his company for continued success under the Buyer’s ownership.
