The associates at O’Keeffe & O’Malley often get calls from business owners stating that they received a letter, email or telephone call from a buyer or M&A firm indicating an interest in their business. The most frequently asked question asked of us is, “Do you think the buyer is fishing, or could they really be the right buyer?”
In today's active M&A market, there are buyers for just about every business. The biggest question is whether the caller is the best buyer for your business -- that will pay the highest possible price and mostly all in cash. The answer is almost always no.
Why? Negotiating with one unsolicited buyer is not the best way to maximize your selling price or your terms, as the buyer is not competitively bidding or negotiating against anyone else, and they know that.
We are currently experiencing an excellent M&A market and there is a lot of money chasing few, good quality businesses. It’s very possible that the buyer/firm contacting you could have a sincere interest in your business. Here are some questions you can ask that will help you evaluate the sincerity of the interest:
- What do you know about my business?
- How many calls/letters/emails have you issued?
- Have you purchased a business before?
- What is your financial capacity to purchase or how much available cash do you have?
- Do you have a fund with committed cash? (If the call is from a private equity group)
- Will you be asking me to finance a portion of the selling price?
- Are you willing and able to pay a premium price?
Getting answers from some of the above questions will help you evaluate whether to continue discussions. Ideally, to maximize your selling price, terms and after-tax cash proceeds, you should have a qualified advisor helping you through the process by talking to multiple buyers in a confidential marketing process. In a prefect selling situation you want to have several letters of intent in hand so you can pick the best prospect for you.
For more information about how O’Keeffe & O’Malley can help you through the selling process, call 913-648-0185.