When a buyer approaches you out of the blue with an offer to buy your business, the instinct is to feel flattered, curious, maybe a little nervous. That’s understandable. But the first thing you need to understand is this: an unsolicited offer is designed, structurally, to benefit the buyer. Not because buyers are villains — they’re just doing their job. But if you don’t understand the mechanics of what’s happening, you can end up selling a $5 million business for $3 million and spending the next decade thinking you did well.
Here’s what to do — and what not to do.
What “Proprietary Deal” Actually Means
When a buyer approaches you directly, they’re pursuing what the M&A industry calls a proprietary deal. The name tells you everything. The buyer’s goal is to acquire your business without competing against other buyers. No auction. No process. Just a quiet conversation between two parties where only one of them knows the market price.
For buyers, a proprietary deal is gold. They avoid the time and cost of a competitive process, they control the narrative, and they can anchor the price early — before you’ve had time to think properly about what your business is actually worth. A business that might attract four or five serious bidders in a structured process gets sold to the one buyer who was bold enough to send the first email.
For you, it means the opposite. You’re negotiating without price tension. You’re potentially agreeing to an exclusivity clause before you’ve tested the market. And the clock is ticking in ways that benefit the person across the table, not you.
This doesn’t mean you should refuse to engage. It means you need to understand what’s happening before you do.
Why They Approached You Privately
Buyers don’t approach you out of the blue by accident. There’s usually a reason they’re coming to you directly rather than going through a broker or running a competitive search. Some of the common ones:
They think they know the price. A competitor or adjacent business often has a rough idea of what you earn. They’ve done the maths on what your business might be worth on a standard multiple — and they’ve approached you hoping to buy at or below that number before anyone else gets involved.
They want speed. Running a proper acquisition process takes four to eight months. An unsolicited approach, if you take the bait, can move much faster. Buyers often have strategic reasons for wanting to close quickly — a rival acquisition they’re trying to beat, a capital event in their own business, an integration timeline.
They’re hoping you haven’t thought about selling. A business owner who hasn’t prepared for a sale has no valuation, no legal documents, no information memorandum, and no advisor sitting next to them. That’s a negotiating advantage for the buyer, not for you. (If you do get to the stage of engaging seriously, vendor due diligence and a proper information memorandum are how you get back on the front foot.)
None of these motivations are sinister. But understanding them changes how you respond.
What Not to Do First
Before anything else, there are a few things you should avoid:
Don’t give them your financials. Not your P&L, not your management accounts, not anything beyond what a stranger on the street could find on ASIC. The moment you hand over detailed financial information without a confidentiality agreement in place, you’ve given away leverage you can’t get back.
Don’t sign an exclusivity clause. Buyers often push early for exclusivity — an agreement that you won’t talk to other potential buyers while negotiations proceed. Exclusivity clauses are standard later in the process (once you’ve agreed to a term sheet and are heading into formal due diligence). At the start of a conversation with a cold approach, signing one locks you in before you’ve had time to understand what the deal is worth. Don’t do it.
Don’t say yes, and don’t say no. “Let me think about it and come back to you” is a perfectly reasonable response to an opening approach. Use that time wisely.
Get a Valuation Before You Respond
This is the most important step, and the one most sellers skip. You need an independent view of what your business is worth before you engage seriously with any buyer — unsolicited or otherwise.
A broker told me recently about a business owner in Western Australia who received an approach from a larger competitor offering $4.2 million for his civil construction business. He was happy with the number — it was more than he’d ever expected to get. He signed a heads of agreement before speaking to anyone. Two months into due diligence, with exclusivity in place and an army of the buyer’s lawyers on the clock, he finally called an advisor.
The independent assessment put the business at $5.8 million to $6.5 million. By that point, he’d signed away his ability to test that price with anyone else. The deal ended up closing at $4.4 million — a $200,000 bump from the original offer, well short of what a competitive process would have yielded.
The valuation doesn’t need to be a formal written report to start with (though that helps). At minimum, speak to an experienced corporate advisor who can give you a ballpark range based on your revenue, profit, and sector multiples. If you’re not sure where your business sits, the valuation calculator is a reasonable starting point.
The rule of thumb: buyers never open with their best price. The gap between their opening number and what they’d actually pay in a competitive process is typically 15–30%. For a $5 million business, that’s $750,000 to $1.5 million you leave on the table by not testing the market.
Understanding the Letter of Intent (and Its Traps)
If you progress a conversation with a buyer, they’ll eventually put a Letter of Intent (LOI) or Heads of Agreement on the table. This is a summary of the proposed deal terms — price, structure, conditions — before the formal legal contracts are drafted.
Two things in LOIs deserve particular attention in an unsolicited approach context.
Exclusivity. Most LOIs include an exclusivity clause, usually 60–120 days, during which you agree not to speak to other buyers. Once you sign this, you can’t create competition. You’re locked into a negotiation with one buyer, under timeline pressure, while they conduct due diligence. That due diligence process often turns up “issues” that justify price reductions. The due diligence checklist exists partly so sellers can prepare for this.
Price adjustments. The headline number in an LOI is rarely the amount you receive. Working capital adjustments, earn-outs, deferred payments, and escrow holdbacks all reduce the effective price — sometimes substantially. If you’re comparing an unsolicited offer to your expectations, compare the net cash in hand at settlement, not the headline figure. The working capital adjustment topic alone can shift a deal outcome by hundreds of thousands of dollars.
Should You Run a Competitive Process?
Here’s the honest answer: in most cases, yes — or at least you should use the inbound interest as a reason to understand whether you should. An unsolicited approach is a useful signal that someone in the market thinks your business has value. That’s worth knowing. But one buyer expressing interest is not the same as the market setting a price.
The practical question is whether you’re ready. Preparing your business for sale takes time — typically six to twelve months of real work to get financials clean, management team documented, and systems owner-independent. If a buyer has approached you when you’re not ready, you have a choice: engage on their terms now, or tell them you’re not in the market right now and take six months to prepare properly.
That second option is underused. A buyer who genuinely wants your business will still want it in six months. If they walk away the moment you say you’re not ready to move immediately, that’s information too.
If you do want to test the market, a corporate advisor can run a structured process — approaching your buyer alongside two or three other prospects — without revealing your identity until qualified parties sign an NDA. That competitive tension, even with a small field, changes the outcome materially.
Tax and Deal Structure: It’s Not Just the Number
One more thing that gets glossed over in unsolicited offer conversations: how the deal is structured affects what you actually keep.
The difference between an asset sale and a share sale, for instance, can shift your tax position significantly. Whether you qualify for the small business CGT concessions — which can potentially reduce your capital gains tax to zero — depends on how the sale is structured and whether you’ve done the groundwork in advance. The tax guide covers this in detail.
The headline price means nothing if you haven’t modelled the after-tax outcome. I’ve seen deals where a slightly lower headline price in one structure put significantly more cash in the seller’s pocket than a higher price in the wrong structure. This is exactly the conversation you should have with a tax advisor and a corporate advisor before you respond to a buyer — not after you’ve signed a term sheet.
If someone’s knocked on your door, take it as a prompt to understand what your business is actually worth — and what a well-run process could deliver. That work is worth doing regardless of whether this particular buyer ends up being the right one.
If you’d like to understand where your business sits before responding to an approach, get in touch or run your numbers through the valuation calculator.