What an inbound approach actually tells you
It tells you that somebody has done the analysis and concluded the asset is worth owning. That is truly useful information, and it is the only useful information the approach contains.
What it does not tell you is what the asset is worth. A buyer who initiates contact has usually spent months building an internal case, has a number in mind, and has correctly assessed that a bilateral conversation costs them less than an auction. Their opening figure is calibrated to be attractive enough to keep you talking and low enough to preserve room, not to reflect the highest price the market would pay.
The first mistake: negotiating immediately
The instinct is to respond to the number. Counter, defend, justify. This concedes the frame: you are now negotiating against a single party who knows there is no alternative, and every subsequent move is within a range they set.
The better first response is to say very little, buy time, and find out what the market thinks. That is not a delaying tactic, it is the only way to know whether the offer is good.
The second mistake: signing an NDA without reading it
Inbound approaches often arrive with a non-disclosure agreement attached, drafted by the buyer. Watch for three things.
Exclusivity or standstill language buried in the confidentiality terms, which quietly prevents you from talking to anyone else.
Non-solicit provisions that run one way: protecting their people but not yours.
Broad information rights that let them keep and use what they learn indefinitely if no transaction happens.
If the counterparty is a competitor, assume that everything you disclose is retained regardless of what the document says, and stage the disclosure accordingly.
Testing the offer
Running a short, targeted process alongside an existing approach is usually the right answer. It does not have to be a full auction and it does not have to take nine months.
A focused process to a curated field of six to ten credible acquirers, on a compressed timetable, achieves most of the price discovery of a full process in a fraction of the time. The inbound party is included, often they remain the buyer, but now they are bidding rather than negotiating.
The spread this reveals is commonly material. Between the highest and lowest credible bid in a middle-market process, thirty percent is common, and the initial inbound is very rarely at the top of that range.
When to just take it
Sometimes the offer truly is exceptional: a strategic buyer with a synergy case no financial buyer can match, at a number above what a process would produce, with terms that are clean. It happens.
The way to know is to test it, not to assume it. And the test is cheap relative to the sum at stake.
What to do this week
Do not respond with a number. Acknowledge the approach, say the board will consider it, and set no expectation of timing.
Then start the preparation you would need anyway, standalone financials, perimeter, data room. That work is required whether you sell to this buyer or to someone else, and it is what puts you in a position to run a real process on a short timetable if you decide to.
The buyer will wait. Buyers who have built an internal case and made an approach do not walk away because a seller took six weeks to organise themselves, and one who does was never going to pay a good price.
What to say in the first reply
Something short, and nothing that resembles a number.
Acknowledge the approach, say the board will consider it, and give no indication of timing. Do not confirm that the business is or is not for sale, because both answers give away a position.
If they press for a range, the honest and useful answer is that you have not run the analysis and will not quote a number you cannot support. That is a stronger position than a figure produced under pressure, and it is true.
Reading what the approach tells you
An unsolicited offer contains information beyond the number, and the number is the least of it.
Who made it. A strategic with a real adjacency has done work to reach you. A financial buyer approaching cold is usually running a broad programme and the approach means less.
How specific it is. An approach citing your retention profile and naming the fit has been prepared. One describing a general interest in the sector has not.
What they asked for. A buyer requesting management time and a data room is serious. One requesting financials by email before any agreement is gathering information.
The timing. Approaches that arrive shortly before a contract renewal, a funding round or a public event are sometimes timed to catch you before your position improves.
The board conversation
An inbound offer creates pressure to respond as though the decision has been made. It has not.
The board is deciding two separate questions. Whether to sell at all, on the analysis it would apply if nobody had called. And if so, whether this buyer at this price is the answer, which cannot be known without testing it.
Conflating them is how sellers end up negotiating a transaction they had not decided to do.
What a short process looks like
Testing an inbound offer does not require a nine month auction.
A focused approach to six to ten credible acquirers, on a compressed timetable, achieves most of the price discovery of a full process. Eight to twelve weeks from launch to indications is achievable where the preparation has been done, and the inbound party is included rather than excluded, so nothing is lost if they remain the best buyer.
What changes is that they are now bidding rather than negotiating, and that difference is usually worth considerably more than the cost of the process.
Editorial Team · Published for orientation, not as advice on a specific transaction. Any figure cited is orientation, not a valuation. See market notes.