A Buyer Approaches You Out of the Blue: What to Do with the First Ten Days
Reply, hold, or decline: that is the decision to make when a buyer approaches you without being asked, and it has to be made before you have said anything at all. An email from an M&A boutique that "represents a European industrial group", a call from a competitor suggesting coffee, a private investor's card left behind after a trade fair: the form varies, the situation does not. Someone chose the moment and prepared for it, and you did not. The next ten days are not for negotiating. They are for deciding the position from which you will negotiate, if you negotiate at all.
Picture an industrial connector manufacturer with 40 employees in the canton of Solothurn. The owner is 58, has started thinking about succession, and has committed to nothing. One Tuesday a two-page letter arrives, well argued, naming three of his products and proposing an "exploratory, non-binding conversation". A hypothetical case, not a client. Three answers are defensible, depending on what he has in hand.
The fork, and why it closes so quickly
An unsolicited approach has a property ordinary sale processes lack: the buyer has the advantage of time. They know what they are looking for, they often already have a price in mind, they have read everything public about you, and they may have written to two of your competitors the same week. You, on the other hand, discover the question at the same moment as the letter.
That asymmetry either closes or hardens in the first exchanges. Three things harden it: giving a number, even "just to see"; accepting exclusivity before checking who is across the table; letting the buyer set the timetable. Three things close it: making the buyer write before you speak to them; naming a single spokesperson; deciding yourself on the date you will answer on substance. In the mandates I run, the final balance of power can almost always be read in the notes of the first call: who asked the questions, and who answered them.
The criteria that decide
| Criterion | Reply now | Hold, to a fixed date | Decline |
|---|---|---|---|
| Who the buyer is | Identified, with a case made, able to finance | An intermediary not yet naming its principal | A generic approach, sent to a whole sector |
| What you already have in hand | Normalised accounts, an independent valuation, owner dependency measured | Clean accounts, but no valuation and no file | Nothing prepared, and a company that runs on you |
| Your personal horizon | Selling within 12 to 24 months was already on the table | Three to five years, with a successor being built | No intention of selling, now or soon |
| Number of credible buyers for your company | Several, and you know who they are | A few, still to identify | One, the one writing |
| What a leak would cost | Limited, the management team knows about the project | Serious, nobody has been told | Severe, two customers make up half of revenue |
| What must exist before the first substantive exchange | A confidentiality agreement signed by the buyer and a designated spokesperson | A reply date and a sentence of provisional refusal | A short written reply that does not close the door |
| Way out | Breaking off after the first exchange costs little | Once the date passes, you choose whether to reply | The buyer will be back, often within 12 to 18 months |
Two rows weigh more than the others. First, the number of credible buyers. A company with only one plausible acquirer cannot open a competitive process, and that is precisely the case where declining too quickly costs the most, since that single buyer cannot be replaced. Conversely, a company that three or four players could take over has no reason to talk to the first one who writes without having sounded out the others.
Second, what you have in hand. Replying without an independent valuation means negotiating against the only number in the room, the buyer's. That is what holding is for: assembling, within a few weeks, what a sale file can honestly contain so that the conversation takes place on your figures, not theirs.
What you can say before signing anything
Until a confidentiality agreement is signed, the rule fits in one sentence: you may talk about yourself, never about your company in numbers. You may say that you received the approach, that the company is not for sale and no process is open, and that you are willing to read a written expression of interest that states who the buyer is, how they would finance and why you. You may set the date on which you will come back to them.
You cannot, or rather you must not, answer the question "would you sell, and at what price", nor its polite variant, "what range did you have in mind". The first number spoken becomes a ceiling if it comes from you and a floor if it comes from them, and that rule never reverses afterwards. You hand over no accounts, no customer list, no organisation chart, and you do not let your fiduciary do it for you because the buyer called them directly. One spokesperson, you or the body you mandate, and everyone else refers back to them.
The confidentiality agreement is not enough on its own, and it is not signed on day one. Facing a direct competitor, it is paired with staged disclosure: an anonymised note first, aggregated figures next, customer names and margins by product never before a letter of intent, and often not before due diligence.
The ten days, in order
Days one and two: acknowledge receipt, in writing, in two sentences, saying nothing of substance. That delay is there so you do not answer under the effect of surprise or flattery, because a well-argued approach flatters, and flattery makes people talk.
Days three to five: qualify the buyer. Who they are, with what funds, why now, why you. An intermediary who names its principal only after a confidentiality agreement is no problem; an intermediary who cannot describe the principal's size or financing is one. A competitor proposing an informal coffee without writing anything wants to know whether you are a seller, not yet to buy.
Days six to eight: settle the fork with the table, and write it down. Reply: with whom, in what framework, with what in hand before the first substantive meeting. Hold: until when, and what those weeks are for. Decline: in what terms.
Days nine and ten: answer in writing, one page at most. It sets the timetable, who speaks, what will be shared and at which stage, and states that no exclusivity is granted at this point. What the buyer reads in that page is that you ran their first ten days, not the other way round.
Who each option suits
Replying now suits the owner who was already considering a sale in the medium term, who has an independent valuation or can obtain one quickly, and whose company has several plausible acquirers. They reply, but at the same time they quietly open the door to the others, so as never to negotiate with only one.
Holding suits the owner who had prepared nothing, whose company still rests largely on them, and who needs three to six months to make the file presentable. They give a date and keep to it. Most serious buyers wait for a date; those who do not have just shown what the negotiation would have been like.
Declining suits the owner who does not want to sell, or not for several years, and the one whose approach is too generic to deserve more than a polite answer. Declining properly means refusing without closing: a company approached once will be approached again, and today's buyer's name will serve tomorrow's process.
In all three cases, you decide. What changes is knowing in the first week that the decision exists, instead of discovering it in front of a letter of intent the buyer has written in your place.