Unsolicited Offer From a Competitor: What to Do Before You Reply

Executive summary: the BLUF on unsolicited competitor offers

An unsolicited offer from a competitor is an opening anchor, not a valuation. UK SME owners who reply with a counter-number before benchmarking independently routinely settle 20 to 40 percent below the price a competitive process would have delivered. The competitor knows your sector, has modelled your likely earnings, and has timed the approach to catch you before you instruct advisers. Your job in the first 72 hours is to slow the conversation down, sign a meaningful NDA, get an independent indicative valuation, and decide whether to negotiate one-to-one or open a quiet, parallel process.

The hidden friction this guide solves is the gap between the price a single, opportunistic buyer is willing to pay and the price the market will pay when two or three credible bidders compete. That gap, on a typical owner-managed business with £500k to £2m of adjusted EBITDA, is regularly six figures and sometimes seven. The key takeaway is simple: never reply to an unsolicited offer with a number until you have benchmarked the business privately and decided your route.

Read on and you will know how to read the approach for intent, what to say (and not say) in the first reply, how to commission a benchmark valuation in two weeks without alerting the market, and how to choose between bilateral negotiation and a quiet two- or three-buyer process. The goal is not to refuse the competitor: it is to make sure their offer competes against a real market view, not against your stress.

The core concept: think of it as selling your house to the first person who knocks

Imagine you are standing in your kitchen on a Saturday morning. A neighbour rings the doorbell, says they have always loved your house, and offers £450,000 in cash today, no estate agent, no chain, completion in eight weeks. It is a real offer, the money is real, and they are clearly serious. The temptation to say yes is enormous: no marketing photos, no viewings, no chain, no fees.

What you do not yet know is that two streets away, a smaller, tireder version of your house sold last month for £495,000 through an open marketing process. Your neighbour knows that. You do not, because you have not phoned an estate agent. The £45,000 gap is the price of not checking. Multiply that gap by the scale of a business sale and you are looking at the value of a comfortable additional retirement decade.

Why competitors approach unsolicited (and what they are usually thinking)

Trade buyers approach unsolicited for two main reasons. The first is opportunistic: their corporate development team scans Companies House filings, sector press, and LinkedIn for owners who look tired, ready, or distracted. The second is strategic: they have an active buy-and-build mandate, your business fills a geographic or capability gap, and they would rather pay 4x without competition than 6x in a competitive auction.

Either way, the buyer has done homework. They have likely modelled three years of your filed accounts, estimated your adjusted EBITDA, looked at sector multiples for recent comparable deals, and decided on a target price. Their opening number is rarely their walk-away number; it is the lowest figure they think will keep you talking. In our experience helping UK owners respond to these approaches, the gap between opening offer and final value when properly contested is typically 25 to 50 percent.

Anchoring: the tactic that costs owners the most money

Anchoring is the negotiating trick of putting a number on the table first. Once a figure exists, every subsequent conversation orbits around it. If a competitor opens at £3.2m and you push to £3.6m, you both feel like you have negotiated, even though the realistic market value might be £4.4m. The anchor has done its work.

The defence is straightforward: never put your number on the table, and never accept theirs as the starting reference, until you have an independent benchmark in your hand. A benchmark valuation does two things at once. It tells you whether the offer is in the right postcode at all, and it gives you a credible counter-anchor backed by sector evidence rather than hope.

Practical action blueprint: the first 90 days after the approach

Below is the staged response we walk UK SME owners through. The aim in every step is to keep options open and resist the pressure to commit to a price or process before the picture is clear.

Day 1 to day 3: acknowledge, do not negotiate. Reply briefly and politely. Confirm you have received the approach, thank them for the interest, and say you will respond substantively within two weeks. Do not share accounts, customer data, employee numbers, or a price expectation. Do not say no either; a flat refusal removes optionality. A holding reply is the right reply.

Day 4 to day 7: instruct an NDA and a benchmark valuation. Ask the buyer to sign a mutual non-disclosure agreement before any further information is exchanged. In parallel, commission a confidential indicative valuation from an independent adviser. A well-run benchmark takes 10 to 14 working days, uses three years of statutory accounts plus a 60-minute call, and gives you a defensible range, not a single number.

Day 8 to day 21: stress-test the buyer's intent. Once the NDA is signed, share a tightly scoped information set (top-line revenue, headline EBITDA, customer concentration, headcount). Ask the buyer for a written indication of value, deal structure (cash on completion versus deferred or earn-out), and proposed timetable. A serious buyer will respond within two weeks. A fishing expedition will go quiet.

Day 22 to day 45: decide your route. Three options exist. First, bilateral negotiation with the original buyer if the indication aligns with your benchmark and the structure is acceptable. Second, a quiet two- or three-buyer process where you invite a small number of credible alternatives to bid alongside the original approach. Third, a full marketed process if the benchmark significantly exceeds the offer and you have the appetite for 9 to 14 months of disciplined work.

Day 46 to day 90: progress to heads of terms or politely close. If proceeding, push for written heads of terms with price, structure, exclusivity period, and conditions to completion. Exclusivity should be no longer than 8 to 12 weeks. If the gap to your benchmark cannot be closed, thank the buyer, decline, and protect the relationship; they may bid better in 12 months once you are sale-ready.

Case study, anonymised. A Bristol-based digital marketing agency with £820k of adjusted EBITDA received an unsolicited approach in spring 2025 from a larger regional competitor. The opening letter offered £2.95m, framed as a quick, friendly deal that could complete in 90 days. The founder, mid-forties and not actively planning to sell, almost replied with a counter at £3.5m. Instead, drawing on our aggregate UK SME transaction data at BusinessValuation.co.uk, the founder commissioned a confidential indicative valuation that landed at 5.2x to 6.0x adjusted EBITDA, a range of £4.3m to £4.9m. With that benchmark in hand, the founder signed an NDA, ran a quiet four-buyer process over the following five months, and completed a sale to a different acquirer at £4.65m with 75 percent cash on completion. The original competitor remained in the process and improved to £4.1m, still well below the final price. The benchmark valuation cost the seller nothing on an indicative basis and added approximately £1.7m to the headline outcome.

The value and valuation impact: why benchmarking always pays back

An unsolicited offer is the single most expensive moment to be uninformed about your business value. Buyers know this. The cost of a confidential indicative valuation is, in nearly every case, immaterial compared with the swing it creates in the final deal. On our aggregate UK SME casework, owners who go to market (or to a bilateral negotiation) with a benchmark in hand realise between 18 and 42 percent more than those who negotiate from the buyer's opening anchor.

Mastering this single discipline of pausing, benchmarking, and then choosing the route also makes the business permanently more sale-ready. The exercise surfaces the same factors that drive multiple expansion in any sale process: customer concentration, recurring revenue, owner dependency, and management depth. Even if you decline the current offer, the diagnostic is now done and the value-gap plan can begin. Most owners who decline the first approach and act on the diagnostic add a full turn to the multiple within 18 months.

BusinessValuation.co.uk exists to give UK SME owners that independent commercial worth assessment in the moment it matters most. A benchmark valuation is not a sales pitch and it is not a marketing exercise; it is the only credible counter-anchor to a buyer who has done their homework and is hoping you have not done yours. Once you know the number, you are negotiating from evidence, not from instinct.

The primary rule here is that knowledge of your own value is the cheapest insurance premium in business. The investment is a two-week confidential exercise. The return is a deal priced against the market, not against your surprise.