Drive up your Company’s valuation from unsolicited offers
In today’s market, entrepreneurs often receive unsolicited calls from private equity firms expressing interest in acquiring their companies. Many owners are open to these conversations but face two common questions:
- How can they engage without consuming too much time or disclosing excessive information?
- If they become interested in a transaction, how can they maximize valuation without running a formal sale process involving multiple bidders?
Old School Tools: A Well Crafted Company Business Plan
One “old school” tool that remains highly effective is a well-crafted company business plan and should be a part of every company’s toolbox. This business plan should be readily available, and updated yearly.
A sharp, concise business plan can highlight the key elements of the business, including its strengths, industry positioning, historical performance, growth opportunities, and the major factors that make it an attractive investment. This approach allows the company to put its best foot forward while thoughtfully controlling the information it chooses to disclose.
Armed with this information, serious buyers should be able to respond quickly with an indication of value or a valuation range, minimizing prolonged back-and-forth discussions and unnecessary disclosures.
A business plan that includes credible projections tied to a reasonable growth strategy can also strengthen the seller’s negotiating position. Rather than debating valuation, an owner can confidently say, “I believe we can execute this plan and achieve a higher valuation in the future.” The prospective buyer must then decide whether to increase its offer to secure the opportunity or walk away.
Client example
It’s no guarantee, but I have seen this approach work multiple times to realize significant increase in value. As an example, a recent client was approached by a PE firm while we were out seeking growth capital to acquire other businesses. My client shared his company business plan that we used for our financing project. The PE firm offered to pay him $36 million cash and retain minority equity rollover which equated to a $60 million company valuation. Even though the offer was valued well over 10x EBITDA, my client turned him down. Despite claiming it was their ‘best offer,’ the PE firm came back 3 days later with a higher offer – $45 million cash paid to owner, at close and minority equity that equated to a $70 million company valuation. That’s a 25% increase in the cash portion of the purchase price! The owner accepted that 2nd offer and closed on the financing in 2025.
In a fast-paced environment where buyers aggressively pursue potential sellers, an old-school business plan can be a powerful tool to maximize the value of an unsolicited opportunity.