If a Buyer Approaches You Directly, a Competitive Process Will Almost Always Get You More Money
- 2 days ago
- 4 min read
By Cory Mertz, Managing Partner | Mertz Taggart
You've built something valuable. You know it. And apparently, so does the buyer who just reached out.
Maybe it's a name you recognize, a PE-backed strategic that is targeting your market. They're complementary. They move fast. And somewhere in the conversation, they mention that working directly saves everyone the hassle of a process. Maybe even the fee.
It sounds reasonable. It isn't.
I've been advising home-based care agency owners on sell-side transactions for over 20 years and have closed more than 105 deals across multiple market cycles. The single most consistent finding: you cannot know what your company is worth until the market tells you. And the market can only tell you if you ask it.
That's true whether you're running a $5 million agency or a $50 million one. Two deals illustrate why.
Deal 1: Same Buyer, $2.2 Million More at Close
A home care agency was approached directly by a well-capitalized strategic buyer. The buyer knew the market, liked the company, and moved quickly. Their offer: $6 million — $5 million at close and $1 million in an earnout tied to hitting a revenue threshold over the following 12 months.
It wasn't a bad offer. But the seller engaged us instead of signing.
We ran a process. The same buyer came back to the table. This time they agreed to $8 million — $7.2 million cash at close, with the remaining $800,000 tied to a 6-month revenue threshold rather than 12. The performance bar was lower. The window was shorter. The risk to the seller was significantly reduced.
Same buyer. Same company. $2.2 million more cash at close — a 44% increase — and better terms.
That $2 million didn't come from catching the buyer in a lie or finding hidden value in the financials. It came from the buyer knowing they weren't the only one at the table.
Deal 2: A Larger Agency — From $14.5 Million to $30 Million
A home health agency came to us with strong quality scores and financials. The sellers thought the company was worth about $14 million. We gave them guidance of $18–20 million, to which they were skeptical. The market validated our guidance, and then blew past it. Seven credible, well-capitalized strategic buyers submitted indications of interest ranging from $14.5 million to $25 million, clustering right around our guidance. Every one of them was a legitimate acquirer with real intent.
Then competition took over. The buyers who stayed through the process submitted LOIs at $26.5 million and $27 million, already well above where they'd started. Then two of the strongest acquirers in the space entered a bidding war.
The deal closed at $30 million. All cash.
If that seller had responded to any single buyer directly — even the highest IOI at $25 million — they would have left millions behind. If they'd responded to the buyer at $14.5 million, they would have left more than $15 million on the table.
Why the Spread Exists
Buyers aren't dishonest when they approach you directly. They're doing their job. A direct deal is better for them — less competition, less process, less price pressure.
What changes in a competitive process isn't the buyer's character. It's their behavior. When a serious buyer knows another serious buyer is in the room, they move. The LOIs in the larger deal came in above the IOIs specifically because both buyers knew they had competition. Neither would have gotten there on their own.
That spread — $14.5 million to $30 million among qualified buyers looking at identical information — doesn't close because one buyer is more honest than another. It closes because of competition.
One more thing this deal illustrates: never tell a buyer what you think your company is worth. The sellers came in at $14 million. If they'd shared that number with any of the buyers who approached them directly, they would have created a ceiling, and that ceiling would have cost them $16 million.
It's Not Just Price
Going direct doesn't only cost you on headline value. In a competitive process, buyers sharpen their terms too — faster timelines, cleaner deal structure, less holdback. When there's no competition, there's no urgency to be accommodating.
The first deal above is a clean example: the earnout period dropped from 12 months to 6, the revenue threshold came down, and the cash at close went up — all because the buyer had to earn the deal.
We've written more broadly about the risks of going direct here. The mechanics aren't complicated. What's harder to internalize — until you see a real deal — is how much you're leaving behind.
A motivated buyer negotiating with a seller who has no alternatives will pay what they have to. Not what they could.
Frequently Asked Questions
If a buyer approaches me directly, should I respond?
You can have an initial conversation, but don't share financials, don't name a price, and don't sign anything until you've spoken with an advisor. Engaging directly without running a process almost always means leaving money on the table.
Does a competitive process work even if I already know who I want to sell to?
Yes. Competition changes buyer behavior regardless of your preference. In the deals above, the sellers' eventual buyers paid significantly more because they knew others were at the table — not because they were the only option.
What if the buyer says the offer expires if I hire an advisor?
That's a pressure tactic. A buyer who walks away because you ran a process was never going to give you their best number to begin with.
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