Should I Refuse an Acquisition Offer?

Compare the offer you actually have with the alternatives you can actually pursue. Price matters, but so do payment timing, conditions, obligations and what you want from the next stage. The useful answer may be accept, counter, prepare or decline.

Compare four possible responses

For any response, examine the buyer’s credible funding, conditions, approvals and ability to complete. A high headline price does not cure an unworkable process; a recognizable buyer does not make a low or restrictive offer right for you.

Write the whole offer beside your alternative

Record what is being sold and how the proposal defines value. Where relevant, distinguish enterprise value from the amount attributable to the seller’s equity. Have the transaction team reconcile debt, cash, working capital and other adjustments so they are not omitted or counted twice.

Payment

Cash payable at closing, escrow or holdbacks, deferred amounts, contingent earnout and any retained or rolled ownership.

Conditions

What must happen before closing or later payment, who controls it, what remains uncertain and which documents define it.

Continuing obligations

Transition work, representations and warranties, restrictions, exposure and responsibilities requiring qualified review.

Your outcome

Timing, money, future work, ownership, team or business continuity and personal objectives that matter to you.

Actual alternative

Continue, prepare for a later process, pursue a genuine other proposal or consider another ownership plan. Record resources, costs, timing and uncertainty.

An earnout or delayed payment is not the same as cash at closing. BDC’s business-sale financing guide distinguishes vendor financing from earnouts dependent on conditions. The actual documents determine your arrangement; use qualified advisers for valuation, legal and tax conclusions.

A higher headline can pay less at closing

These fictional offers illustrate payment timing, not business valuations or client outcomes. Proposal A describes up to $2 million of seller consideration: $1.4 million payable at closing, $200,000 in escrow and up to $400,000 in a contingent earnout. Proposal B describes $1.65 million payable at closing with no earnout under these simplified assumptions.

B’s closing payment is $250,000 higher: $1.65 million minus $1.4 million. A’s headline is higher, but its escrow release and earnout need separate examination. Do not count the earnout as guaranteed or treat the escrow as already available cash.

Neither offer wins from this arithmetic alone. Compare closing conditions, release terms, control over earnout measures, retained obligations and credible funding. The example excludes actual adjustments, transaction costs and taxes; it is not a calculation of net proceeds or expected value.

Respond with accurate information

A useful first step can be to acknowledge receipt and request the written proposal, timetable and conditions while arranging the appropriate advice. Check confidentiality, disclosure obligations and any commitments your response could create. Do not assume that an informal email or a document label makes everything nonbinding.

Describe only alternatives you actually have and information you may properly disclose. Do not invent another buyer, a competing bid or the capacity to continue indefinitely. With the transaction team, decide what questions to ask and what can be said accurately about timing and priorities.

Choose advisers for the actual work required and agree their scope, fees and responsibilities. Advice can help identify issues, but it does not guarantee a higher price, preserve an offer or make every transaction worth pursuing.

Know what you can accept, what needs clarification and what you will do if this offer ends.

Use the proposal as one piece of evidence

An inbound offer tells you what one buyer is proposing under particular assumptions and conditions. It does not independently establish fair value. Compare the proposal with current business evidence and an appropriate valuation analysis, then record which conclusions remain uncertain.

Before declining, check whether the reason depends on misunderstood terms or an unsupported price expectation. Before proceeding, check whether the payment and obligations meet your actual objectives. Neither a future better offer nor completion of the present one is assured.

For related questions, use how to value a private company before a sale, the discussion of control in the capital raise that cost control, and capital without discipline. Those pages do not establish the right answer to your offer.