Don't sell your business too cheaply.
A new breed of M&A acquirer is on the scene, and they're shaking up the game. Their business model? Acquiring companies, using the profits to fund further acquisitions, and growing their portfolio.
These acquirers often offer lower valuations. So, as a business owner what can you do if you receive an unsolicited offer from one of these acquirers to ensure you don't sell too cheaply?
Stay Calm and Assess:
When you receive an unsolicited offer, it's important not to make any hasty decisions. Instead, take the time to assess the proposal, understand the acquirer's intentions, and evaluate whether it aligns with your goals and your business valuation.
Understand your Valuation:
Understanding your business valuation is an imperative. This will help you better understand your position and help you decide whether the offer is competitive and fair.
Engage an M&A Advisor:
Partnering with an experienced M&A advisor is crucial when navigating unsolicited offers. They can help you assess the offer, negotiate better terms, and identify other potential acquirers willing to pay a higher valuation.
Leverage Your Strengths:
Make sure the acquirer is aware of your business's unique strengths, such as growth potential, innovative products or services, a loyal customer base, and a strong management team. Demonstrating your company's value can help improve the offer.
Explore Other Options:
Don't be afraid to explore alternative options, such as finding other interested acquirers or even deciding not to sell at this time. Remember, you're not obligated to accept the unsolicited offer, and choosing the path best for you and your business is crucial.
Be Prepared to Negotiate:
Don't hesitate to negotiate a higher price if the initial offer is lower than you'd like. Work with your M&A advisor to present a counteroffer based on your company's true value and be ready to back it up with solid financials and growth projections.
Know When to Walk Away:
If the acquirer isn't willing to meet your valuation expectations, be prepared to walk away. It's essential to ensure you receive fair compensation for your hard work and not to settle for less than your business is worth.
For most business owners receiving an unsolicited offer from an acquirer can be both exciting and challenging. However, by following these steps, you can protect your interests and ensure you don't sell your business too cheaply.