Someone just offered to buy your business: how to know what it is worth before you answer

The email from a buyer, and the question you cannot answer

It usually arrives quietly. A private equity group, a competitor or an individual with family money reaches out, says kind things about your company and asks whether you would consider a conversation. A few weeks later there is a number. It is a large number, larger than anything you have been paid in a year, and it comes with an exclusivity request and a short window to decide.

Owners call us at that moment with the same question: is this good? And the honest answer is that they do not know, because they have never sold a business and have never seen what a competitive market would pay for theirs. The buyer, on the other hand, does this for a living. They know exactly what they are willing to pay, and the first number is not it.

We have been advising Texas owners of manufacturing, distribution, service and construction companies on exactly this since 2008. The purpose of this guide is to give you what you need before you reply to that email: how to think about the offer, how to find out what the business is actually worth, and what a real sale process looks like from the owner's chair.

Why the first offer is almost always the low one

An unsolicited offer is a buyer's opening move in a negotiation where they are the only bidder. Without competition, there is no reason to pay more than the minimum you might accept. Buyers also know that most owners anchor on the headline number without reading the structure: how much is cash at closing, how much is an earnout tied to future performance, how much is a seller note you are financing yourself, and how much depends on you staying for three years.

Exclusivity is the other lever. Once you sign a letter of intent that prevents you from talking to anyone else, the buyer's due diligence begins, and in my experience the price tends to move only in one direction after that: down, as diligence finds reasons. None of this makes the buyer a villain. It is simply how a single-bidder process works, and it is why the owner's job is to turn one bidder into several before signing anything.

• No competing bids, so no pressure on price
• Headline number that hides earnouts, notes and rollover equity
• Exclusivity that removes your alternatives before diligence starts
• A deadline designed to prevent you from getting advice
• Diligence that renegotiates the price after you are committed

What to work out on your own before you respond

Do not reply with a yes or a no. Reply that you are flattered and will consider it, then do three things. First, get your numbers in order: the last three years of financial statements and tax returns, current year to date, and a clear list of what the business pays for that a new owner would not, such as your personal vehicle, family members on payroll or above-market rent to a company you own. Those add-backs are what buyers value, and owners routinely undercount them.

Second, write down what you actually want. Full exit or partial? Stay a year or leave at closing? Does it matter to you who takes care of your employees? A number means nothing until you know what you would do with it and what you would give up. Third, think about who else might want this company. Competitors, customers, suppliers, private equity groups that already own something similar. If you can name five, a competitive process is realistic.

Keep the whole thing confidential. Do not mention the offer to your management team, your banker or your biggest customer until you have a plan. Word that a business is for sale travels fast and damages value.

• Three years of financials and tax returns, plus current year to date
• A list of owner add-backs with documentation
• Your personal goals: timing, role after closing, what matters beyond price
• A list of who else might logically want the company
• A decision to keep the offer confidential for now

When it is fine to wait a year, and when to act now

If the business is on an upswing, the offer is unimpressive and you are not ready personally, waiting can make sense, because buyers pay for the trailing numbers and a strong year adds real value. If you are within one to five years of wanting out, pre-exit planning now will raise the price later: cleaning up the books, reducing dependence on you, locking in key customers and employees.

Act now if the offer is serious and your industry is consolidating, if your health or energy says it is time, or if you simply want to know the answer. Finding out what the company is worth does not commit you to selling it. Our discovery meeting is complimentary and lasts about an hour, and the opinion of value that follows is free. Many owners across Dallas–Fort Worth use it as a planning tool years before they sell.

How a competitive sale is run, step by step

A proper process begins with understanding the business and its value. We review the financials, normalize earnings for owner add-backs, and arrive at an opinion of value based on what buyers in the current market are paying for comparable companies. You decide whether to proceed knowing where you stand. If you do, we prepare the business for market: a confidential summary that describes the company without naming it, and a detailed memorandum released only to buyers who sign a non-disclosure agreement and are qualified to close.

Then the business is marketed, quietly and widely, to private equity groups, capital groups and individual investors across the country. The goal is multiple interested parties on a common timeline, because competition is what moves price and terms. Buyers submit indications of interest, you meet the serious ones, and the strongest submit letters of intent. We help you compare them on structure, not headline: cash at close, earnout risk, your role afterward, treatment of employees.

After you choose a buyer, due diligence runs, legal documents are negotiated with your attorney and CPA, and the deal closes. You can also design the consulting arrangement for your transition period to fit your life. Our fee is earned only at closing; if a transaction does not complete, you owe us nothing.

• Discovery meeting and free opinion of value
• Normalized financials and a confidential marketing package
• Buyers qualified and bound by non-disclosure before they learn the name
• Confidential marketing to private equity, capital groups and individuals nationwide
• Multiple offers compared on structure, not just price
• Due diligence, legal documents and closing with your CPA and attorney
• No fee unless the transaction completes

What actually determines what a buyer will pay

Buyers price a business on its earnings, its risk and its growth. Earnings means normalized profit after add-backs, which is why documenting them matters. Risk is where most of the variation lives: how dependent the company is on you, on one customer, on one supplier or on one key employee. A business that runs without the owner is worth more than one that stops when the owner takes a vacation. Recurring revenue is worth more than project revenue. Clean books with a few years of consistent history are worth more than reconstructed ones.

Industry and size matter too. Larger companies generally attract institutional buyers who pay higher multiples, and some sectors are consolidating in ways that create temporary demand. Market conditions, including the cost of debt for a buyer, shift the range year to year. We do not quote multiples here because they move, and because the right number for your company only comes from looking at it. What you can control is the risk profile, and that is where pre-exit consulting earns its keep.

How to choose who represents you in the sale

Ask how the advisor gets paid. A fee owed only at closing aligns the advisor with you; large upfront retainers do not. Ask how they market a business and how they protect confidentiality, including who sees the name and when. Ask what size and industries they actually close, because a firm that sells restaurants is not the right fit for a precision machine shop and vice versa.

Ask for their track record in numbers and how many deals they are working at once. Ask whether they will coordinate with your CPA and attorney or try to replace them. And pay attention to whether they tell you things you do not want to hear in the first meeting. An advisor who agrees with your number before seeing your books is selling you a listing agreement, not a result.

• Fee structure tied to closing, not retainers
• A defined confidentiality process for the marketing phase
• Experience in your revenue range and industry
• A documented track record of closed deals
• Willingness to work alongside your CPA and attorney
• Straight talk about value, including bad news

The mistakes that cost owners the most at exit

The first is signing an exclusive letter of intent with the only buyer in the room. Once you do, your leverage is gone and diligence becomes a one-way negotiation. The second is telling people. A leak to employees or customers before a deal is certain can cost you both, and some of the worst outcomes we see started with a casual conversation at an industry event.

The third is letting the business coast once you decide to sell. Buyers price trailing performance, and a soft year during the process shows up directly in the offers. The fourth is ignoring structure: an offer with a large earnout tied to targets you will not control after closing is worth far less than its headline. And the last is not planning for taxes and for life after. Talk to your CPA early about how proceeds will be taxed, and think honestly about what you will do the Monday after closing.

What happens when you contact us

We start with a complimentary one-hour discovery meeting at our Frisco office, or by phone if that is easier. You tell us about the business, the offer if there is one, and what you want. We ask for the financials and come back with a free opinion of value and a candid view of whether the offer is in the range, below it or, occasionally, above it.

From there, the decision is yours. Some owners take the opinion of value and go back to the buyer with better information. Some ask us to run a full process to bring more buyers to the table. Some decide it is not the year and engage us for pre-exit consulting instead. Whatever you choose, nothing is owed unless a transaction closes, and everything you share with us stays confidential. We work with owners across Dallas–Fort Worth, Austin, Houston and San Antonio, and the owners who do best are the ones who found out what the business was worth before they answered the email.

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