Merger & Acquisition Insights

How to Respond to An Offer to Purchase Your Business

Posted on April 01, 2015 by Spencer Tenney

Many transportation businesses attract unsolicited offers from customers, investors, and/or friendly competitors at some point in the company’s life cycle. The vast majority of these offers or exploratory deal discussions rarely go anywhere. Why? Many owners of established, successful transportation businesses are unprepared for something they should expect –unsolicited offers to purchase a good business. This shouldn’t be the case. The cost of being unprepared to respond or to consider an unsolicited offer can easily cost a business owner hundreds of thousands of dollars. Here are three tips to help you keep all of your strategic options open and to position your business to capitalize on unsolicited, premium offers to purchase your business.

1. Keep your financials in order and only share your company’s financials in a protected, controlled transaction environment. If your financials are not current or if they do not tie together accurately, it is very difficult for substantive conversations about a business purchase to take place. Keeping your financials clean and current will allow to get on the dance floor when a buyer is willing and ready to do a deal. As an added bonus, it will equip you to improve the overall financial management of the business moving into the future. When your financial information is organized be careful how you share it with others. Without a third party intermediary managing the exploratory purchase process, it can be difficult to share sensitive information–especially with competitors. The solution to this problem is not avoiding the exploration of deal opportunities all together. An experienced transaction advisor can help you determine what information should be shared and when so your business is protected and so is the opportunity to explore a possible sale.

2. Regularly obtain a third party assessment of your transportation business’ value. A question The Tenney Group commonly asked business owners is, “If a buyer presented the best possible offer that was ever going to be available for your business, how would you be able to recognize it? Many business owners pour their heart and soul into a business, branding it with personality and character yet go years without understanding what it is all worth.  Clearly understanding the value of that business will help you appreciate the quality of an offer when it lands on your doorstep. Feeling good about saying no is just important as feeling good about saying yes to an offer.

3. Get a professional opinion on the quality of the offer and an assessment on the available options to bridge valuation gaps and ultimately complete a deal with the interested buyer. Business value in the transportation industry is widely misunderstood. When you add the built in distrust that many seller’s maintain for buyers, it is understandable why many transportation business purchases that should happen don’t happen. A third party industry transaction professional can be highly instrumental in keeping a deal live, injecting new deal options into the discussion, and providing solutions that help all parties accomplish their respective goals.

Do these tips guarantee transaction success? Of course, not. They do, however, guarantee business owners the peace of mind that comes with giving themselves, their partners, their families, and their employees the full consideration of a unique opportunity that could impact all of their lives. For many business owners, addressing that responsibility is just as important as the money exchanged at the closing table.

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