Most business owners think selling their company starts when an offer shows up. In reality, that’s often where the biggest mistakes begin.
A lot of founders receive unsolicited offers from private equity firms or strategic buyers. It’s flattering, and in many cases, the business is strong enough to justify the interest. However, without a structured process or competing buyers, even great companies can sell for less than they’re worth.
I’ve seen firsthand how one owner went from negotiating a declining offer to ultimately doubling their outcome, simply by changing how the process was run.
Dr. Z, a business owner in the life sciences research tools industry, received a $30 million offer for his company. This offer was based on $15 million in revenue and an estimated $1 million in EBITDA. Confident in the robust offer with an implied 30x EBITDA valuation and buyer, Dr. Z initially declined to hire a banker. However, his trusted advisor convinced him to meet with a banker with expertise in research tools and drug discovery.
The banker identified untapped value in Dr. Z’s business and warned that exclusivity could shift leverage to the buyer. Despite this, Dr. Z continued negotiations with his initial buyer.
Six months later, the buyer lowered the offer to $22 million, and Dr. Z was no longer interested in working with them.
Dr. Z then hired the banker introduced to him, who recommended a competitive sales process involving additional buyers. Not only did the banker uncover an adjusted EBITDA of $4 million due to a single oncology research product generating $5 million in revenue with 80% margins, but the banker also identified public companies that specifically stated their desire to enter Dr. Z’s space.
This research and process expertly run by the banker led one buyer to purchase Dr. Z’s company for $60 million, doubling the original offer.
The Risk of Going Solo
Sophisticated companies, PE firms and large industry players have entire teams dedicated to reaching out directly via email or phone, hoping to catch you when you’re ready to sell.
They invest heavily in this strategy because acquiring your business directly helps them avoid price increases driven by competing buyers. While most groups are willing to pay a fair price, without competitive pressure, there’s no reason for them to pay more than they need to.
Private equity groups are spending tens of millions of dollars on cold outreach, and we’re seeing more business owners become susceptible to that siren song. These PE firms often raise capital by touting their success in sourcing “proprietary deal flow,” meaning they find business owners directly who aren’t represented by an investment banker.
The unspoken message to investors is that they can buy companies for less.
What many owners don’t realize, especially those who proudly say they sold directly to private equity, is that within the industry, those deals are often seen as ones where the seller left serious money on the table.
A simple solution is to tell groups who reach out that you’re not pursuing a deal but will call them when the time comes. Keep a record of these groups to reference later.
Here are some of the biggest risks you face in these situations:
1. Lack of Expertise and Experience
These buyers are often skilled negotiators with extensive experience in acquiring businesses. They have teams of professionals who specialize in evaluating potential acquisitions, conducting due diligence, and negotiating deals.
2. Information Asymmetry
In negotiations, knowledge is power. Often buyers have access to vast amounts of financial data, market insights and industry trends, which allow them to have a deeper understanding of the market and your business’s value drivers than you likely have.
3. Time and Resource Constraints
Selling a business requires significant time, effort and resources. Diverting your focus from daily operations can affect business performance. When performance deteriorates, your business’s value drops.
4. Limited Market Exposure
When negotiating with a single group, you miss the opportunity to tap into a broader market of potential buyers. This limited exposure may result in missed opportunities or a suboptimal suitor.
5. Complex Deal Structures and Terms
Transactions often involve intricate deal structures and complex terms. These can include earn-outs, seller financing, stock options and various performance-based incentives. If you’ve never negotiated a deal before, it is unlikely that the terms will favor you.
The takeaway: When a seller attempts to go it alone with a single buyer, they give away their advantage. It may pay to partner up with a seasoned investment banker when looking to sell your business.
Selling your business depends on how the process is run and who you’re negotiating with, not just the fact that an offer exists. A single inbound offer might feel like progress, but without other buyers involved, you have little leverage. Sophisticated buyers understand this and structure deals in their favor. When you introduce competition and bring in the right support, the dynamic changes. You move from reacting to terms to helping shape them, and that’s what protects the value you’ve spent years building.
In my experience, the difference between a good exit and a great one comes down to preparation, positioning and who controls the process. Sophisticated buyers understand this dynamic extremely well. The question is whether you do, too.
Excerpted from "Exit Right: How to Sell Your Business," © Tim Vorhoff, 2026. Vorhoff, the senior vice president and founding partner of CreoValo, is recognized in the industry on owner-led exits and business-sale readiness for America’s mid-market, family-owned companies.
This column originally appeared in the May/June issue of Industrial Distribution magazine. Sign up here to subscribe to ID’s Today in Industrial Distribution daily newsletter.
