You've Been Approached by a Buyer. Now What?

Jason Huett
Jul 6
7 min read

Updated: Nov 1

Quick Answer

When approached by a buyer for your business, first identify which buyer category they belong to (Private Equity, Search Fund, High-Net Worth Individual, or Individual Searcher), research their legitimacy, and immediately engage professional advisors — specifically a business broker, attorney, and accountant — before sharing any confidential information or discussing price.

Understanding the Surge in Buyer Inquiries

So, you've been approached by a buyer interested in acquiring your business. Many business owners have had this experience, especially if you operate a sizable 7 or 8-figure business.

If you feel like you've seen more of these inquiries arriving in your email inbox, you're not mistaken. I'm a member of several brokerage and search fund groups (professional buyers), and over the past 12 months, there has been a massive focus on "cold email" outreach where buyers attempt to engage business owners via email (and sometimes by phone call).

There are thousands of these professional buyers deploying automated email outreach. Most of these messages aren't sent from a real human but instead from a mass email system, sometimes even AI-driven.

There's a critical pivot occurring right now: these professional buyers (who have deep pockets) are looking at Middle Market businesses (7 and 8-figure businesses) because individual investors are having difficulty getting deals done with higher interest rates. Thus, these professionals now have a distinct advantage and are acquiring businesses with increased speed.

The Four Categories of Buyers

Let's face it, most business owners are excellent negotiators — it's what has led them to grow a successful business. While it may be attractive to go at it alone and forego working with a broker, I can tell you that these professional buyers are some of the most sophisticated financial experts you will encounter.

Before moving on, let's categorize some of these buyers to make it easier to identify who you might be dealing with:

I. Private Equity Groups (PEGs)

Who they are: Professional fund managers who acquire privately held companies to generate returns for their investors.

Sophistication level: Highest. They have access to enterprise-level market research tools and deploy entire teams for every acquisition.

Advantage: Deep pockets, extensive resources, and highly experienced negotiators.

II. Search Funds

Who they are: Professional investors who identify acquisition targets before securing capital.

Key difference from PE: Search Funds typically don't have investment capital in place when they first approach you. They find a business, present it to investors, then secure funding for the purchase.

Typical approach: Acquire single businesses rather than building portfolios.

Similar to Private Equity, Search Funds are also comprised of professional investors. The main difference between the two is that Search Funds often don't have investment capital in place at the time they approach a business owner.

Instead, their job is to find a business to acquire, report back to their investors, and then secure the capital needed to make the purchase. They also tend to acquire a single business, whereas Private Equity acquires multiple businesses.

III. High-Net Worth Individuals

Who they are: Individuals with $1,000,000+ in capital seeking business acquisitions.

Current challenge: This group is increasingly being outbid by Private Equity and Search Funds in today's market.

IV. Individual Searchers

Who they are: The demographic most business owners envision when receiving inquiries.

Experience range: Varies widely — some are sophisticated, but many are first-time buyers new to the acquisition process.

Key Questions to Ask When Approached by a Buyer

Before engaging with any buyer, there are several steps you will want to take to protect yourself and your business:

Step 1: Ask, "Which group do you belong to?"

Ask which one of these categories the buyer fits into. You may need to push the buyer to ascertain the answer to this question. This will help you determine the level of expertise the party has that you're dealing with.

Step 2: Research the Entity Thoroughly

Reverse search their email address and phone number
Review their website for legitimacy and track record
Check their LinkedIn profiles to verify they're representing themselves accurately
Look for red flags or inconsistencies in their story

Step 3: Engage Professional Advisors

I tell all of my clients that the first three groups all have the financial and people skills to out-negotiate a high majority of business owners in their sleep, often without the business owner even realizing that the playing field is severely stacked in favor of the professional buyer.

The three professionals that can help you are: (1) a Business Broker, (2) an attorney, and (3) an Accountant (in this order).

At the very least, start with consulting with your attorney and find a business broker that can steer the conversation through the appropriate steps of engagement.

If you want a full-price offer and favorable terms, I can't stress this step enough - you're likely dealing with the Harvard finance and math whiz which is rarely disclosed up front.

What to Avoid in Negotiations

Let's talk brass-tacks. Here is a short list of what not to do:

Do NOT sign a buyer's Non-Disclosure Agreement (NDA) without consulting your attorney. The buyer should be signing an NDA that your attorney drafted to protect your interests.
Do NOT share any financial, operations, human resources, or sales and marketing company information. Unfortunately, there are many tire kickers and bad actors looking to reverse engineer your business model.
Do NOT discuss a potential sale price. This point needs to occur much further in the process after the buyer has been thoroughly vetted.

Conclusion: Protecting Your Business Interests

In closing, being approached by any of the groups I mentioned above can be flattering. However, it's crucial for you to understand the buyer type they represent and build your team of professional advisors who can protect your interests. And, I often say, "The first offer is rarely the best offer." Entertaining multiple offers from multiple buyers is the best way to maximize your sale price.

Frequently Asked Questions (FAQs)

What should I do first when a buyer contacts me about purchasing my business?

First, ask which buyer category they belong to (Private Equity, Search Fund, High-Net Worth Individual, or Individual Searcher). Then research their legitimacy through reverse email/phone searches and LinkedIn verification before engaging further. Do not share any business information until you've consulted with a business broker and attorney.

Should I sign an NDA that a buyer sends me?

No. Never sign a buyer's NDA without consulting your attorney first. The buyer should be signing an NDA that your attorney drafted to protect your interests, not the other way around. Many buyers use their own NDAs to gain advantages in the transaction.

What's the difference between Private Equity and Search Funds?

Private Equity Groups manage large investment funds with capital already in place and typically acquire multiple businesses. Search Funds identify acquisition targets first, then secure capital from investors to complete the purchase, and usually acquire a single business.

How do I know if a buyer inquiry is legitimate or a scam?

Research the buyer thoroughly by reverse searching their contact information, reviewing their website and track record, and verifying their LinkedIn profiles. Be wary of buyers who pressure you for information quickly, refuse to answer questions about their background, or have inconsistent stories about their experience and funding sources.

Do I need a business broker if I've already been approached by a buyer?

Yes, especially if approached by Private Equity, Search Funds, or High-Net Worth Individuals. These are sophisticated financial experts who negotiate acquisitions regularly. A business broker levels the playing field, protects your interests, and often creates competitive bidding environments that increase your sale price.

What information should I NOT share with a buyer initially?

Do not share financial statements, operations details, HR information, sales and marketing strategies, or discuss sale price until the buyer has been thoroughly vetted and you have professional advisors in place. Some inquiries are from competitors or bad actors looking to reverse engineer your business model.

Why are so many buyers suddenly contacting business owners?

Professional buyers have massively increased automated "cold email" outreach over the past 12 months. They're targeting Middle Market (7 and 8-figure) businesses because high interest rates make it difficult for individual investors to secure financing, giving professional buyers with deep pockets a competitive advantage.

Should I accept the first offer I receive for my business?

No. "The first offer is rarely the best offer." The most effective strategy for maximizing your sale price is entertaining multiple offers from multiple buyers. Competition among buyers creates leverage and drives better terms and higher valuations.

What professionals should I hire when approached by a buyer?

Engage three professionals in this order: (1) Business Broker to steer the transaction and protect your interests, (2) Attorney to review legal documents and terms, and (3) Accountant to ensure proper financial presentation and understand tax implications.

How long does it typically take to sell a business after being approached?

The average time to close a business sale is 6-9 months. This includes time for buyer vetting, due diligence, negotiations, financing arrangements, and legal documentation. Rushing this process often results in unfavorable terms or failed transactions.

Can I negotiate directly with a buyer without professional help?

While possible, it's not recommended. Professional buyers—especially Private Equity and Search Funds—are sophisticated financial experts with teams supporting every acquisition. They can out-negotiate most business owners without the owner realizing the playing field is stacked against them. Professional representation typically results in significantly better terms and higher sale prices.

What are the red flags that indicate a buyer isn't serious?

Red flags include: refusing to answer questions about their background or funding, pressuring you for confidential information before signing an NDA, being vague about their acquisition experience, having no verifiable track record, or making unrealistic promises about timeline or price without proper due diligence.

To your success,

Jason Huett CEO | Business Broker

Collaborative Commercial Business Brokers, LLC.

Providing business brokering services to business owners in Madison, WI, southern Wisconsin, and northern Illinois.

PS: If you've been approached by a buyer and want to maximize your sale price and terms, schedule a complementary consultation with us today.