How to Respond to an Unsolicited Offer for Your Business
Many business owners receive their first acquisition offer not through a sale process they initiated, but unexpectedly. A phone call, an email, a letter delivered to the office. The offer may come from a strategic acquirer, a private equity firm, a search fund, or simply an interested party.
Most owners are not prepared for the moment. How they respond in the first days and weeks often shapes the outcome more than the offer itself.
For owner-managed businesses in Vancouver and across BC, unsolicited offers are becoming more common. Lower deal volumes in some sectors have pushed buyers to source proprietary opportunities directly. That trend means more owners are receiving inbound interest, often with little context for how to evaluate it.
Why Unsolicited Offers Are Becoming More Common
Active acquirers in the lower mid-market include private equity firms, family offices, search funds, independent sponsors, and strategic operators. Many of them have outbound origination teams whose entire job is to identify privately held businesses and approach owners directly.
Common reasons unsolicited approaches occur include:
• a sector consolidation thesis being executed by a private equity platform
• a strategic buyer expanding into a new geography or product line
• a search fund principal looking to acquire a single business to operate
• a competitor or supplier exploring vertical integration
• a buyer following up on public information such as awards, expansions, or industry recognition
The approach itself does not necessarily indicate a high level of conviction or a strong price. It indicates interest, which is different.
The Risk of Engaging Without Preparation
The early stages of an unsolicited conversation can feel flattering and low-stakes. The buyer is often experienced, well-prepared, and skilled at building rapport. The owner is usually neither of those things in this specific context.
Risks of engaging without preparation include:
• anchoring to the buyer’s framing of value and structure
• disclosing information that limits future leverage
• agreeing to exclusivity before testing the market
• losing months of management focus on a single buyer
• giving up the option to run a competitive process later
The seller’s position is strongest at the beginning of the conversation. It tends to weaken with every disclosure and every passing week.
The First 48 Hours: What Not to Do
When an unsolicited approach arrives, the most common mistakes happen quickly.
Owners should generally avoid:
• responding with detailed financial information
• giving a verbal price expectation in the first call
• signing any document, including non-disclosure agreements, without review
• agreeing to a meeting before understanding who the buyer is
• discussing the approach broadly within the organization
A short, professional acknowledgement that the inquiry has been received is almost always the right first move. Anything more substantive can wait until the owner has had time to think and, where appropriate, take advice.
Should You Engage at All?
Engaging with an unsolicited buyer is not always the right choice. It also is not always the wrong choice. The decision depends on several factors:
• whether the owner is genuinely open to a transaction in the foreseeable future
• whether the buyer appears credible and capable of closing
• whether the business is reasonably prepared for diligence
• whether the timing fits with broader personal and business considerations
Owners who are years away from any liquidity event may still benefit from learning about the buyer universe and current valuation dynamics. Owners who have been considering a transition may find that an unsolicited approach is the catalyst they needed to start a thoughtful process.
The Problem with Single-Buyer Negotiations
Even when an unsolicited offer is attractive on its face, negotiating with one buyer carries structural problems.
Without competitive tension:
• there is no benchmark for whether the price is strong, fair, or weak
• there is no pressure on the buyer to improve terms
• the seller bears most of the timing risk
• diligence often expands without producing better economics
• the buyer can re-trade more easily as the process drags on
A single buyer knows the seller has no easy alternative. That knowledge tends to be reflected in how the deal evolves between LOI and closing.
When a Process Produces a Better Outcome
In many situations, the better response to an unsolicited offer is not to accept or reject it, but to use it as the starting point for a competitive process.
A focused process around an unsolicited offer often involves:
• identifying a short list of other credible buyers, both strategic and financial
• preparing a confidential information package that addresses the most likely questions
• approaching alternative buyers in parallel under a controlled timeline
• using competitive bids to test and improve the original offer
• negotiating with leverage that does not exist in a single-buyer dialogue
This is the same logic that informs how strategic and financial buyers value businesses differently. Different buyers will price the opportunity differently, and the only way to know is to test the market.
What to Ask Before Sharing Information
Before any meaningful information is shared, sensible questions to ask include:
• who is the buyer and who are the decision-makers
• what is the source of capital and is it committed or yet to be raised
• what is the strategic rationale for this specific business
• what acquisitions has the buyer completed in the last 24 months
• what does the buyer expect from management post-closing
• what indicative valuation and structure does the buyer have in mind
Buyers who are well-prepared can answer these questions easily. Buyers who cannot or will not answer them are often early-stage or unfunded.
The Role of a Non-Disclosure Agreement
A non-disclosure agreement (NDA) should be in place before any non-public financial information is shared. Even at that stage, the information shared should be limited and curated.
A reasonable NDA covers:
• protection of confidential information
• non-solicitation of employees and customers
• term of the obligations, typically two to three years
• return or destruction of information at the end of the process
The NDA is not a substitute for thoughtful disclosure. Information should be released in stages, with each stage proportionate to the buyer’s demonstrated commitment.
Understanding the Buyer’s Real Interest
Unsolicited approaches vary widely in seriousness. Some buyers have a real thesis, real capital, and a real intention to close. Others are testing the market, building a pipeline, or seeing what owners are willing to share at no cost to them.
Signals of a more serious buyer include:
• clarity on the strategic or investment rationale
• a track record of completed acquisitions of similar size
• willingness to share information about themselves
• a structured process and named team members
• an indicative value range based on early information
Signals of a less serious buyer include vague responses, indefinite timelines, frequent rotation of personnel, and reluctance to commit to any indication of value.
How Valuation Discussions Should Be Framed
Owners are often asked early in an unsolicited conversation what they think the business is worth. The honest answer is that value depends on context, performance, and buyer universe, not on a number the owner offers on a phone call.
A more useful response is to defer the question and direct it back to the buyer. The buyer is the party making an offer. The buyer should be the one to articulate value first, supported by their assumptions and rationale.
Premature anchoring is one of the most common ways owners reduce the value they ultimately receive.
When the Offer Is Worth Pursuing as Presented
There are situations where engaging directly with a single unsolicited buyer is reasonable:
• the buyer is clearly the highest-fit acquirer in the market
• the offer materially exceeds any plausible alternative outcome
• confidentiality concerns make a broader process undesirable
• timing or personal considerations favour a discreet, focused transaction
• the owner is willing to accept a single-buyer outcome with full awareness of the trade-offs
Even in those situations, the owner benefits from running a structured negotiation with proper preparation, materials, and advice, rather than treating it as a casual conversation.
How KitsWest Capital Helps
KitsWest Capital regularly advises owners who have received unsolicited offers. Our work in those situations typically begins with a confidential conversation about the buyer, the offer, and the owner’s broader objectives. From there, we help clients think through whether to engage, how to respond, and whether to run a focused process around the inbound interest. This work draws on our broader M&A advisory and valuation practices.
A typical engagement includes:
• an independent view on the offer and the buyer
• framing of the negotiation and information disclosure
• preparation of materials proportional to the situation
• targeted outreach to alternative buyers where appropriate
• negotiation and execution through closing
Final Thoughts
An unsolicited offer is an opportunity, but it is not always the opportunity it first appears to be. The buyer has thought about the approach for weeks or months. The owner is usually responding cold.
How the owner handles the first 48 hours, what is shared, what is committed to, and whether competitive tension is created will often determine whether the eventual outcome is a fair one or a missed one.
Speak with an Advisor
If you are evaluating a business sale, acquisition, unsolicited offer, or valuation matter, KitsWest Capital welcomes confidential discussions.
