It often starts with a phone call or a friendly lunch invitation. A competitor, a supplier or someone from a private equity firm says they admire what you’ve built and asks whether you’d ever consider selling. Even if you weren’t thinking about it, the question tends to stick.

An approach like this isn’t a reason to panic or to rush. It’s information. Handled well, it can tell you something useful about how your business is seen. Handled badly, it can cost you bargaining position, or put sensitive information in the hands of a competitor.

Work out who is asking, and why

Different buyers want different things, and that shapes how carefully you should respond.

  • Competitors may want your customers, your people or your territory. They’re often serious buyers, but they’re also the people who would gain most from learning how your business works.
  • Suppliers or customers may want to secure a source of supply or a route to market. Their interest can be genuine, but it can also be a way to protect their own position.
  • Private equity firms buy businesses as investments, sometimes as a platform and sometimes as an add-on to a company they already own. Many contact a large number of owners, so a first letter doesn’t always mean much yet. They often want management to stay on after a sale.

Before you say much, it’s fair to ask them a few questions of your own. Why your business? Have they bought companies before? How would they pay for it? Their answers tell you a lot about how serious they are.

How to reply without shutting the door

You don’t need to say yes or no on the first call. A short, polite reply keeps your options open: something like “We’re not actively looking to sell, but I’m always willing to listen. Tell me more about what you have in mind.”

What you should avoid at this stage is just as important:

  • Don’t name a price, even a rough one. Whatever number you say first tends to become the ceiling.
  • Don’t share financial results, customer names or margins over the phone or in an email.
  • Don’t agree to a site visit or a meeting with your managers yet.
  • Don’t let the conversation become a reason to change how you run the business.

It’s perfectly reasonable to say you’d like some time to think, and that you’ll come back to them. Serious buyers expect that.

An NDA comes before any information

If you decide to go further, ask for a non-disclosure agreement before you share anything beyond what’s publicly known. Have your own lawyer review it rather than simply signing the buyer’s version, since their form will naturally favour them.

An NDA limits how the buyer can use your information and who they can share it with. It doesn’t make disclosure risk-free. With a competitor in particular, keep the most sensitive details, such as customer-level pricing or key employee terms, back until much later, after a letter of intent and once the buyer has shown they’re serious. Our article on exploring a sale confidentially covers how staged disclosure works.

Why one buyer on its own weakens your position

When only one party is at the table, they set much of the pace and many of the terms. You have nothing to compare their offer against, so it’s hard to know whether the price is fair or whether the conditions attached to it are normal.

Here’s a simplified, hypothetical example. A competitor offers $4,000,000 and asks for a letter of intent with 90 days of exclusivity. During due diligence, they raise concerns about a slow quarter and revise the offer to $3,400,000, with part of it paid later through an earnout. With no other buyers lined up and months already spent, the owner feels the only realistic choices are to accept or to start over.

That doesn’t mean a single buyer is always a bad buyer. Sometimes the first party really is the best fit. But you can only be confident of that if you have some sense of what else is out there. A structured process that brings in more than one interested buyer at the same time, where possible, gives you a basis for comparison on price and on terms. Our guide to comparing offers explains why the headline number is only part of the picture.

An unsolicited offer tells you someone wants your business. It doesn’t tell you what your business is worth.

What to do before you respond in detail

Use the time you’ve asked for well. A few practical steps:

  • Decide whether you want to sell at all, and on roughly what timeline. An approach is a good prompt to think about it, but it shouldn’t make the decision for you.
  • Get a realistic view of value before you discuss numbers. That means normalized earnings and a range, not a figure the buyer suggests. Our valuation page explains how an advisor approaches it.
  • Speak to your accountant and lawyer early. Whether a deal is structured as a share sale or an asset sale, and how the price is paid, can change what you keep. A share sale of a qualifying small business corporation may qualify for the Lifetime Capital Gains Exemption, but the eligibility rules are detailed.
  • Consider letting an advisor reply for you. It puts some distance between you and the buyer, and makes it easier to slow things down or to bring in other parties quietly.

If you do decide to talk further, keep a simple record of what you’ve shared and with whom. It takes a few minutes and protects you if the conversation ends and you later speak to other buyers.

General information for business owners and buyers, not financial, legal, tax or accounting advice. Any examples are hypothetical.