What to Tell a Client Who Already Has a Letter From a Buyer

Read the letter for what it is

Unsolicited letters come in several forms and the attorney should identify which one the client has. A one-page expression of interest from a private equity fund's business development team may be a prospecting letter sent to many companies; it signals the fund's interest in the industry, not necessarily this company's value. A letter from a strategic acquirer that names the client's products and customers reflects more specific knowledge and may be a stronger signal. A letter of intent with a price, a structure, and an exclusivity clause is an offer that the buyer expects to be signed. LOIs commonly state purchase price and proposed structure, and may include exclusivity and confidentiality provisions, but the attorney must review which terms are binding and which are not. [1]

Each form warrants a different response, but the first instruction is the same: the client should not sign, and should not share financial statements beyond what is public, until the attorney has read the letter and advised on the appropriate disclosure plan. The client should also avoid treating an informal follow-up conversation as acceptance. Owners often have already had the second conversation and sometimes the third. The attorney should find out exactly what was said and what was sent. If the buyer is a competitor, the parties should take particular care with competitively sensitive information. The FTC recommends sharing only the information needed for effective due diligence, tailoring disclosure to the stage of the process, and using safeguards where needed. [2]

The attorney should also read the letter for the terms the client did not notice. An exclusivity period, a no-shop, a provision that the buyer's diligence costs are reimbursed if the seller walks, a reference to the buyer's "standard" purchase agreement, or a price "subject to confirmatory diligence" can shape the negotiation to come. The client should understand each term before responding.

Why the first offer is rarely the best

A buyer that sends an unsolicited letter is choosing the moment and the terms. The buyer may know the seller has not prepared, has no other bidders, and has no range to measure the offer against. The price in the letter therefore reflects the buyer's position and should be treated as a data point, not automatically as market value. It may be fair. It may also be the price the buyer expects to be accepted, which is not the same thing.

The attorney does not need to argue with the number. The attorney needs to explain that the client cannot know whether it is competitive without a comparison, and that the comparison comes from one of two sources: a valuation range built from the client's own financials, or other buyers. A valuation range can be prepared in an illustrative two-to-three-week work plan. Other buyers may take four to six weeks. Both timelines can be shorter than an exclusivity period the buyer is asking for, which may be 60 to 90 days, but the actual schedule depends on the business, the information available, and buyer responsiveness.

The attorney should also explain a possible post-exclusivity scenario without presenting it as a prediction. Diligence can surface issues, some real and some disputed, and the price can be adjusted downward. A seller that has told employees and family that the company is selling and has turned away other interest may have fewer alternatives when responding to an adjustment. A client who hears this possibility in the first call understands why alternatives matter.

Building a short process around the letter

The letter is not necessarily a problem to be managed. It can be a head start. The client has a buyer with demonstrated interest, which may reduce one early sourcing step. The attorney's task is to add alternatives without losing that buyer.

The sequence is compressed. The client completes the intake questionnaire and uploads the core documents in the first week. The valuation range is prepared in the second. The teaser and CIM are drafted in the second and third. The buyer list is built and reviewed by the client in the third, with the inbound buyer on it. Outreach begins in the fourth week. Interested buyers sign NDAs, receive the CIM, and submit IOIs by a deadline the client sets, in an illustrative four-to-six-week process after the first call.

The inbound buyer is treated like every other bidder: it signs the firm's NDA, receives the CIM, and submits an IOI by the same deadline. A serious buyer may accept that structure, but the attorney should not assume how this buyer will respond. A buyer that refuses to participate in a process has given the client information to consider about how it may behave in diligence. The client decides whether to continue, negotiate directly, or end the conversation.

What to say to the buyer in the meantime

The client will want to know what to tell the buyer who is waiting. The attorney should draft the response, and the client should send it. The message is short: the client appreciates the interest, has engaged counsel, is organizing information, and will be in a position to engage in a few weeks. The client is not declining and is not accepting. The client is not granting exclusivity.

If the buyer presses for a signed LOI immediately, the attorney should help the client understand that pressure as information, not as proof of bad faith. A buyer that is confident in its offer may wait for a short preparation period, while another buyer may insist on a faster decision. The client should compare that pressure with the price, structure, diligence terms, and alternatives before deciding.

The firm should confirm with its own counsel how the federal M&A broker exemption and applicable state rules apply to the activities it takes on in building the short process and the fees it charges for that work, as it would for any process engagement. The SEC staff's 2014 no-action position was withdrawn in 2023 and was limited to the facts and conditions described in that letter, so it is not a current conclusion for this engagement. [3] Software prepares, organizes, matches, and tracks; the attorney and the client decide and act, and in this scenario the client's first decision is simply to wait.

When the letter should be accepted

Not every inbound letter should start a process. If the client's business is below the size where other buyers will engage, if the owner has a reason to close fast that outweighs price, or if the buyer is the one strategic acquirer for which this company is uniquely valuable and the price reflects that, the attorney may advise the client to negotiate directly.

Even then, the attorney should run the valuation first. Two weeks of preparation gives the client a range, a reviewed data room, and a position from which to negotiate the LOI. The attorney who tells the client to negotiate directly without a range is leaving the client in the position the buyer chose for them.

The call this week

If a client has a letter on the desk, the first call can happen today and follows the sequence above. Read the letter. Find out what has been said and sent. Tell the client not to sign. Explain the illustrative four-to-six-week path. Draft the holding response. Open the intake. The attorney who makes that call has converted an inbound letter into an organized process discussion and has given the client alternatives before the buyer's exclusivity clock starts.

How Acquivo Pro fits

A short process built around an inbound letter depends on speed in the preparation phases, and Acquivo Pro can help the firm organize them. The client completes the questionnaire and uploads documents once through a branded portal under the firm's name. The valuation engine produces a deterministic range from those inputs. The platform generates the teaser and CIM from the questionnaire and data room, builds a prospect list using documented buyer criteria, and tracks NDA and IOI flow against the deadline the client sets, with the inbound buyer in the same pipeline as every other bidder. To walk through a process on a client you have in mind, request a demo through the Contact page.