A buyer has approached you. What should you ask?
Use a calm set of questions to understand the buyer, their role, funding expectations and proposed process.
By An unexpected approach from a buyer can be flattering, unsettling or both. The good news is you don't need to decide anything on the first call. Your only job is to understand who you're talking to and what they have in mind.
Confirm identity and role
Ask for the buyer's full name, business, website and contact details. Clarify whether the person is the prospective buyer, an adviser, a broker or an intermediary representing someone else.
If an adviser is involved, ask when you will meet the decision-maker.
Verify details independently using a published website or professional adviser rather than relying only on the original message. A genuine buyer should be comfortable with reasonable verification.
Ask what attracted their attention
A useful answer should connect to the buyer's stated focus without pretending they already know confidential facts. Public signs such as service type, location, operating history or visible team can explain an approach.
Treat a confident early view of value with caution if the buyer has not seen reliable information. A preliminary range may be possible later, but it should come with assumptions.
Understand the proposed process
Ask what the next two or three steps would be, what information is requested and who will see it. Clarify when confidentiality terms, a written indication and exclusivity might be proposed.
You do not need to rush into exclusivity before understanding key terms and the buyer's capacity to proceed.
Ask what happens if either party decides not to continue. A sound process acknowledges that possibility and explains how confidential material will be handled.
Discuss funding at the appropriate stage
It is reasonable to ask how the buyer expects to fund a transaction. Early answers may describe a mix of buyer funds and finance.
As discussions become serious, ask what evidence can be provided, what approvals remain and what happens if finance is not obtained.
Funding risk should be reflected in conditions, timing and advice. A high headline offer with uncertain finance may not provide the certainty an owner expects.
Bring in your own advisers
Ask whether the buyer is comfortable dealing with your accountant, solicitor and broker. Their involvement should not be treated as hostility.
Good advisers help clarify information, risk and documents.
The buyer's advisers act for the buyer. Even where everyone is constructive, their advice is not independent advice for you.
Your checklist
What to do next
- Verify the buyer through independent contact details
- Clarify whether they are principal or intermediary
- Ask why your business fits their focus
- Request an outline of the next steps
- Ask who will access information
- Understand funding evidence and remaining conditions
- Do not rush exclusivity
- Involve your own advisers
Example
Martin receives a brief acquisition email. He checks the sender's website, calls the published number and asks whether the caller is the buyer. Before sharing records, he requests a written outline of the process and has his accountant prepare aggregated figures. Verification and pacing let him explore without making a commitment.
An illustrative example, not a real client or transaction.
Questions owners ask
Must I sign a confidentiality agreement?+
It may be useful before sensitive disclosure, but obtain advice and also use practical access controls.
Should I name my price first?+
There is no universal rule. Ask what information and assumptions support any discussion, and get independent advice.
Can I speak with more than one buyer?+
Generally you can explore options unless you agree otherwise. Understand any exclusivity document before signing it.
Important
This article is general information only. It doesn't take your personal circumstances into account and isn't financial, legal, tax, employment or valuation advice. Velaro Group is a buyer of businesses. It isn't a business broker, licensed financial adviser, registered tax agent or law firm, and it doesn't act for sellers. Please get advice from your own accountant, solicitor or financial adviser before making any decision. Read the full disclaimer.
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