An unsolicited offer can bring a particular kind of relief. Someone understands the business and wants to buy it, giving the founder a clear view of an outcome that felt theoretical a month earlier. That relief can quickly become an anchor.
One buyer gives you a data point. A competitive process gives you a market.
Price is only one part of the deal
Founders understandably focus on the headline valuation, while the value they ultimately receive depends on much more:
- Cash paid at close
- Debt and working-capital treatment
- Rollover equity
- Earnout conditions
- Representations, warranties, and indemnities
- Your future role and restrictions
- Certainty and speed of closing
A buyer can increase the headline number while tightening the terms elsewhere. Without alternatives, it becomes difficult to know which points are genuinely market and which simply favour the buyer.
Competition changes behaviour
The value of competition extends across the entire negotiation.
A buyer is more likely to move decisively when they know the opportunity may go elsewhere. They are more likely to clarify their strategic logic, improve terms, commit internal resources, and resolve issues quickly. The seller gains the ability to choose a structure that meets their needs.
Leverage comes from having another credible option.
Choose the right process
Creating a market means contacting the right parties through a controlled process. Broad, poorly managed outreach can create confidentiality risk, distract management, and exhaust the company.
The right competitive set matters more than the volume of names.
For one business, that might mean three strategic acquirers with a clear synergy case. For another, it might mean financial sponsors with relevant platforms. Refinancing, raising growth capital, or continuing to hold can also provide the strongest alternative.
The market has to be built
Credible competition emerges when each counterparty has a clear reason to care.
That means understanding the company’s value through different lenses. One buyer may care about customers. Another may care about geography. Another may see a capability it would take years to build. A financial investor may see a platform for acquisitions. A lender may see durable cash flow.
The strategic case has to be specific enough that the right party can recognize its own opportunity.
Let strategy define the outcome
A bilateral deal can deliver the best outcome when it is chosen deliberately after the alternatives have been assessed.
Before granting exclusivity, giving away detailed information, or allowing one proposal to set your expectations, understand what other credible paths exist. You may return to the original buyer. If you do, you will return with a clearer view of value and a much stronger ability to negotiate the complete transaction.
One buyer creates an opportunity. Multiple credible options create a market.
Create the market,
Jack