I got an offer for my business. What do I do next?

Don’t say yes, don’t say no, and don’t sign anything yet. First, find out what the offer really is: how much you get in cash at closing, and how much is an earnout, a seller note, or equity in the buyer’s company. Then get a second opinion on what your business is worth. One buyer with no competition almost always means a lower price, so have a specialist look at the offer before you respond.

That’s the short version. The rest of this page is the order to do it in, and why. If you want help with the first step, you can find a specialist who looks at offers like this every week.

Why the first offer is rarely the real offer

Most first offers come from a private equity firm or a roll-up company. They show up as a phone call, or because a friend in the same trade sold to them last year. The first number is often high on purpose. It’s built to get your attention and get you on a second call.

Then the process starts, and the number tends to move in one direction. Every question you answer is a chance for the buyer to find something they don’t like. The more you share, the more they find. Anything that makes the purchase riskier for the buyer reopens the price.

Here’s what usually triggers it:

• Add-backs: The buyer removes expenses you counted as one-time or personal. Each one lowers your earnings, and the price follows. Read more in our guide on what an add-back is.
• Customer concentration: If a few customers make up most of your revenue, the buyer sees risk. See how that works in customer concentration risk.
• Anything else that looks risky: Old equipment, key employees who could leave, messy books, or a business that can’t run without you.

By the time this happens, you’ve shared everything and you have no other buyer. That’s the position you want to avoid.

Your first 72 hours: what to do and what not to do

The first three days matter more than the next three months. You’re not trying to decide anything. You’re trying to avoid giving away your position.

Don’t react on the phone

Say thank you and nothing more. You don’t need to say the number is too low, and you definitely shouldn’t say it’s great. Any reaction tells the buyer how far they can push.

Don’t share financials without an NDA

An NDA is a confidentiality agreement. It keeps the buyer from using what they learn against you or telling your competitors, customers, or employees. No NDA, no numbers. A serious buyer will sign one without a fight.

Don’t agree to exclusivity

Exclusivity means you agree to deal only with that buyer for a set time, often 60 to 90 days. It’s the moment you lose your options. If the deal falls apart in week twelve, you’ve lost three months and you start over. Our guide to the letter of intent covers what’s binding and what isn’t.

What’s actually in the offer

A headline price is not a payment. It’s the top of a range. What you take home depends on how the price gets paid.

Look for these pieces, and ask the buyer to put each one in writing:

• Cash at closing: The money that lands in your account on the day the deal closes. This is the number that matters most.
• Earnout: Money you only get if the business hits targets after you sell. The buyer runs the business, so you don’t control the outcome. Our guide on earnouts explains how they go wrong.
• Seller note: The buyer pays you over time, like a loan you made to them. You carry the risk that they stop paying. See what a seller’s note is.
• Rollover equity: You keep a share of the new company instead of getting paid for it. You get that money only when the buyer sells later, and you have little say in when. Read more about rollover equity.
• Working capital peg: The buyer sets a target for how much cash and inventory the business should have at closing. If you fall short, the price drops dollar for dollar.
• Escrow or holdback: A slice of the price the buyer keeps for a year or more, in case a problem shows up after closing.

Any one of these can turn a good headline into a bad deal. The one that catches an owner off guard the most is usually the one they didn’t ask about.

A worked example: how $5 million becomes $3.4 million

This is a made-up example, but the math is how real offers work. Say the buyer offers $5 million.

• Headline price: $5,000,000
• Minus earnout you may or may not collect: $500,000
• Minus rollover equity you don’t get paid for until the buyer sells: $500,000
• Minus seller note paid over three years: $300,000
• Minus working capital adjustment because the business had less cash on hand than the peg: $150,000
• Minus escrow held back for 12 to 18 months: $150,000
• Cash in your hands at closing: $3,400,000

That’s before taxes and advisor fees. A $5 million offer became $3.4 million in cash. The other $1.6 million might arrive, in whole or in part, years later. Or it might not.

Is it a good number?

A price only means something next to your earnings. Buyers price a business as a multiple of what it earns. Small owner-run businesses are usually priced on SDE, which is the total profit one owner takes out of the business. Larger ones are priced on EBITDA, which is profit before interest, taxes, and depreciation.

The multiple depends on your trade, your size, and how risky the business looks. A roofing company, an HVAC company with a big service-agreement base, and a manufacturer all sell at different multiples. So the first question is not “is this a lot of money?” It’s “what multiple is this for my trade?”

To check, you need two things:

• Your real SDE or EBITDA, with add-backs a buyer would accept, not just the ones you’d like them to accept
• The going multiple for businesses like yours

Our guides on how businesses are valued and what drives your multiple walk through both.

Why one offer is weak leverage

When there’s one buyer, the buyer sets the pace. They know you have no other choice, and they price that in. They also know you’re busy running the business and have never sold one.

A competitive process changes that. When a broker brings several buyers to the table, the buyers know they’re bidding against each other. That usually raises the price and improves the terms, including more cash at closing and fewer strings.

A broker also does something an owner can’t do alone. They sort out which buyers actually have the money to close. Plenty of buyers will make an offer. Far fewer can fund it. Meanwhile you keep running the business, which is the full-time job you already have.

The brokers we work with have each sold 300 or more businesses.

Who to call, and in what order

Order matters here. Each call makes the next one more useful.

1. A broker or M&A advisor first. Ask for a broker opinion of value, often called a BOV. Most brokers do this for free, because they only get paid when a deal closes. This gives you a second opinion and a number to compare.
2. A CPA second. Ask them to show you the tax picture on the offer. The same price can leave you with very different amounts after tax depending on how the deal is structured.
3. A deal attorney third. Before you sign anything, have an attorney who handles business sales read the documents.

On that last point, be careful. Your regular CPA does not count as an acquisition expert. Neither does your cousin who is a lawyer, unless they do business sales for a living. A will and a purchase agreement are very different documents.

Our guide on whether to use a broker, an M&A advisor, or go solo goes deeper on the first call.

How to respond without losing the buyer

You can buy time without being rude or losing interest. A buyer who wants your business will wait a few days for an owner who is being careful. A buyer who pushes you to decide this week is telling you something.

Here’s something close to what you can say on the phone:

“Thank you. I’m glad you called, and I’m open to talking. I don’t make big decisions fast, and I have people I need to run this by first. Can you send the offer in writing? I’ll get back to you by next week.”

Or by email:

“Thanks for the offer. I’d like to understand it fully before I respond. Please send it in writing, including how much is paid at closing and how much is paid later. I’ll be in touch once my team has reviewed it.”

A few rules go with the script:

• Do not name a number you’d accept.
• Do not send financials until an NDA is signed.
• Do not sign anything until a deal attorney has read it.
• Do not agree to a date that forces you to decide before you’ve had a second opinion.

When taking the direct offer is the right call

The direct offer isn’t always wrong. Two situations make it a fair deal more often than not.

First, you know someone who already sold to this buyer. If a friend in your trade sold to them and was treated well, that’s the best reference you can get. Call that friend and ask what changed between the first offer and the final check.

Second, you ask a broker and they tell you honestly they can’t do better. A good broker will say so. If they tell you the offer is strong and a process won’t beat it, take that seriously and go for it.

Either way, get the second opinion first. It costs you nothing, and it’s the only way to know the offer is fair rather than hope it is.

If you’re thinking about selling, we can find the right broker for your business. It’s free, and a real person does the matching.

Common questions owners ask

Should I counter the offer?

Not yet. A counter before you know what's in the offer is a guess. Find out the cash at closing, get a second opinion on value, and talk to a broker first. Then counter with facts, not a number that feels right.

Can the buyer pull the offer?

Yes, right up until you both sign the final purchase agreement. A buyer can also keep the offer and lower the price after they look at your books. That's why a second buyer matters. It gives you somewhere to go if the first one backs off.

Is a letter of intent binding?

Mostly no on price and terms, but often yes on a few parts. Exclusivity and confidentiality are usually binding. Exclusivity means you can't talk to other buyers for 60 to 90 days. Have a deal attorney read it before you sign.

Do I have to hire a broker to respond to an offer?

No. But you should at least get a free broker opinion of value before you answer. If a good broker tells you they can't beat the offer, that's useful to know. If they say they can, you just found out what you were about to leave behind.

If you’re holding an offer right now, the next step is a conversation with someone who has seen a hundred of them. Find a Florida business broker to look at the numbers before you reply.