What to Do When a Buyer Approaches You Directly (Unsolicited Offer)

The call comes out of nowhere. A PE firm's principal, a strategic buyer's development team, or occasionally a financial sponsor you have never heard of reaches out with a casual expression of interest in your business. They are friendly, well-prepared, and flattering. They know your revenue, your market position, and sometimes your growth trajectory. And they want to meet.

Unsolicited acquisition approaches are not random. They are designed. PE firms and strategic buyers monitor lower middle market companies systematically, through industry databases, LinkedIn, trade publications, and referral networks. When they identify a business that fits their thesis, they approach directly because direct outreach is the most reliable way to acquire a company below market price. The strategy works because founders, who are typically not experienced in sale processes, often react to the flattery and urgency rather than the underlying economics.

Why unsolicited offers almost always underprice the business

The pricing discount in an unsolicited offer is structural, not accidental. The buyer approaches you directly for one primary reason: to avoid competition. In a competitive process, multiple buyers bid against each other, which drives pricing to true market levels. In a direct negotiation with a single buyer, there is no market, only a negotiation between an informed buyer and an inexperienced seller.

PE firms are particularly sophisticated about this dynamic. Their deal teams build proprietary deal flow programs specifically to source acquisitions outside of formal banker-run processes. These programs are designed to find situations where the founder has not run a process, has not benchmarked the business's value, and can be moved toward a transaction before competitive pressure is introduced. This is not bad faith, and it is rational acquisition strategy.

The gap between an unsolicited offer and a competitive process outcome is well-documented. GF Data and Axial research consistently show that businesses sold through competitive advisor-run processes achieve 15–30% higher multiples than comparable businesses sold in direct negotiations. On a $5M EBITDA business at 7x, that gap is $5.25M–$10.5M of transaction value.

What to do in the first 72 hours

The first 72 hours after an unsolicited approach are the period in which most founders inadvertently give away leverage. The common mistakes: expressing premature interest, suggesting you have already been thinking about selling, sharing financial data informally, or agreeing to meet without any protective framework in place.

Resist the urgency the buyer creates. PE deal teams are trained to accelerate the timeline, create a sense of scarcity ("we are deploying capital this quarter"), and establish exclusivity before the seller has benchmarked their options. These tactics are effective because they create artificial time pressure on a decision that deserves careful analysis.

NDA negotiation, what matters and what does not

The first formal step after an unsolicited approach is typically an NDA. Most founders sign whatever the buyer sends because they want to move the conversation forward. This is a mistake. The NDA is a negotiating document, and its terms matter.

Insist on a mutual NDA. Buyer-only NDAs protect buyer confidential information (which you will not receive anyway) without protecting yours. A mutual NDA creates parity. Most buyers will accept mutual NDAs without significant pushback.

Define what is confidential with specificity. "All information shared in connection with the potential transaction" is too broad. The definition should cover financial statements, customer lists, employee information, and operational data, not vague categories that could extend to public information or general business knowledge.

Include a standstill provision. A standstill prevents the buyer from contacting your employees, customers, suppliers, or lenders directly during the evaluation period. This protection is particularly important if the buyer is a competitor or if word of a potential transaction reaching your workforce could create operational disruption.

Specify a time-limited confidentiality obligation. Perpetual confidentiality obligations are rare in practice and create long-term complications. A 2–3 year confidentiality period after the last disclosure is market standard.

How to use the approach to create a competitive process

An unsolicited approach is valuable for one thing above all else: it is proof that the market values your business. Use it.

The most effective response to an unsolicited approach is to treat it as a catalyst for a properly structured process, not as a one-on-one negotiation. Engaging a banker or readiness advisor after the first approach allows you to assess the credibility of the initial offer, identify the full buyer universe, and launch a process that creates competitive tension.

You do not have to exclude the original buyer. In many cases, the unsolicited buyer becomes one of several serious bidders in a competitive process, and the competition drives them to revise their initial indication upward. Buyers who approach directly and then find themselves in a structured process typically increase their bid by 10–25% relative to their initial indication, because the alternative is losing the deal entirely.

If you are not ready for a full process, consider a targeted outreach: identify 5–8 additional buyers most likely to value your business and have informal conversations that establish a competitive context. Even the credible possibility of competition changes the pricing dynamic with the original buyer.

Evaluating buyer seriousness and readiness

Not every unsolicited approach represents a serious acquisition intent. Some buyers are conducting market intelligence, gathering competitive information, understanding business model economics, or assessing the seller's interest for a potential future transaction. Distinguishing serious buyers from intelligence-gatherers is a critical skill.

Signs of a serious buyer: they have a clear articulation of why your business fits their specific portfolio or platform strategy; they have closed comparable transactions in your sector recently; they have a named decision-maker and a defined approval process; they are willing to sign an NDA and provide a preliminary valuation range; and they respond to your questions about financing and timeline with specificity.

Signs of a buyer who is fishing: vague thesis ("we are interested in businesses like yours"); no recent comparable transactions in your sector; requests for detailed financial information before providing any preliminary valuation; inability to define a decision timeline; and references to "needing to see more before they can say anything about value."

Even a credible, serious buyer benefits from a competitive process. The goal is not to keep buyers engaged indefinitely without progress, and it is to use the information the approach provides to make a better decision about process strategy, and then execute that strategy efficiently.