How do we determine whether we should hire an M&A advisor or sell directly to an unprompted buyer who sent us an unsolicited offer?

Question

Tyler Smith · Accepted Answer

When an unsolicited buyer reaches out with a flattering letter expressing interest in acquiring your business, recognize it for what it is: a coordinated proprietary deal-sourcing campaign. Buyers target off-market founders specifically to avoid competing in an open auction. Selling directly to an unprompted buyer almost always leaves substantial money on the table and subjects you to punitive deal terms.

An unsolicited offer should trigger an objective evaluation process, not an immediate signature on an exclusive Letter of Intent:
- Single-buyer risk: Without competitive tension, a lone buyer has zero incentive to offer their top dollar. They know you have no benchmark, and they will steadily chip away at your valuation during diligence through re-trading.
- Lack of deal-term leverage: Purchase price is only half the equation. Net working capital pegs, indemnification baskets, escrow holdbacks, and earnout structures determine how much cash you actually take home. Professional buyers will outmaneuver unadvised founders on legal deal architecture every time.
- Diligence exhaustion: Managing buyer requests without an intermediary forces the owner to negotiate directly while attempting to run operations, leading to emotional burnout and compromised operating results.

Hire an experienced M&A advisor or investment banker whenever your enterprise value exceeds five million dollars. A quality advisor normalizes your EBITDA, crafts a compelling narrative, sets up a controlled auction, and forces buyers to compete. Even after paying transaction advisory fees, a competitive process historically yields twenty to forty percent higher net proceeds compared to an uncontested proprietary sale.