How do I evaluate unsolicited acquisition offers?

How to Evaluate Unsolicited Acquisition Offers: A Strategic Guide for Software Founders

It often starts with a short email or a call from a corporate development executive or private equity partner: “We’re interested in acquiring your company. Would you be open to a conversation?”

For many software founders, this moment is both flattering and disorienting. You weren’t actively looking to sell, but now the idea is on the table. The question becomes: How do you evaluate an unsolicited acquisition offer—objectively, strategically, and in the best interest of your shareholders?

This article outlines a structured approach to assessing inbound acquisition interest, with a focus on software and technology businesses. Whether you’re running a bootstrapped SaaS company or a venture-backed platform, the stakes are high—and the right response can significantly impact your company’s future and your personal outcome.

1. Pause Before You Respond

First, resist the urge to react immediately. An unsolicited offer is not a binding commitment—it’s an opening move. While it may feel urgent, especially if the buyer hints at exclusivity or a limited window, you are under no obligation to engage on their timeline.

Take time to gather your thoughts, consult with trusted advisors, and assess your strategic position. A thoughtful pause signals professionalism and gives you space to evaluate the offer on your terms.

2. Understand the Buyer’s Intent

Not all buyers are created equal. Some are strategic acquirers seeking synergies, others are financial sponsors looking for platform investments or roll-ups. Understanding the buyer’s motivation helps you assess:

Valuation rationale – Are they paying for growth, technology, market share, or EBITDA?
Post-acquisition plans – Will your team be retained? Will your brand survive?
Deal certainty – Is this a serious buyer with a track record of closed deals?

Firms like iMerge often help founders vet buyer profiles and assess credibility, especially when the buyer is a private equity firm or a competitor.

3. Benchmark the Offer Against Market Valuations

One of the most common mistakes founders make is evaluating an offer in a vacuum. Without a clear understanding of current market multiples, it’s difficult to know whether the offer is fair—or opportunistic.

For example, if your SaaS company is growing 30% annually with 80% gross margins and strong net revenue retention, you may command a 6–10x ARR multiple in today’s market. If the unsolicited offer is based on a 3x multiple, it may be significantly undervaluing your business.

Resources like Valuation Multiples of SaaS Companies and EBITDA Multiples for SaaS Companies can provide useful benchmarks. But for a tailored view, a formal valuation or market sounding exercise is often warranted.

4. Assess Strategic Fit and Timing

Even a strong offer may not be the right offer—especially if it arrives at the wrong time. Ask yourself:

Is this aligned with our long-term vision?
Are we at an inflection point (e.g., product launch, new market entry) that could significantly increase valuation in 12–18 months?
Would a broader process yield better terms or more strategic buyers?

In some cases, an unsolicited offer can serve as a catalyst to explore a structured exit. As we noted in Exit Business Planning Strategy, timing and preparation are critical to maximizing value.

5. Evaluate Deal Structure, Not Just Price

Headline valuation is only part of the story. The structure of the deal—cash vs. stock, earn-outs, escrows, indemnities—can materially affect your net proceeds and risk exposure.

For instance, a $20 million offer with 70% cash at close and a 30% earn-out tied to aggressive growth targets may be less attractive than an $18 million all-cash deal with minimal contingencies.

Be especially cautious with:

Earn-outs that are difficult to achieve or poorly defined
Stock consideration in illiquid or volatile acquirers
Escrow terms that tie up significant proceeds for extended periods

As discussed in How Do I Handle Earn-Outs in the Sale of My Software Business?, deal structure can be as important as valuation in determining the true value of an offer.

6. Consider the Tax Implications

Taxes can erode a significant portion of your proceeds if not planned for properly. The structure of the deal (asset vs. stock sale), your corporate entity type, and your personal tax situation all play a role.

For example, a C-corp asset sale may trigger double taxation, while a stock sale may qualify for favorable capital gains treatment. Timing also matters—pending tax law changes or year-end planning can influence your net outcome.

See Tax Law Changes and the Impact on Personal Taxes from Selling a Software Company for a deeper dive into this topic.

7. Decide Whether to Run a Competitive Process

One of the most powerful ways to evaluate an unsolicited offer is to test it against the market. A controlled, confidential process—run by an experienced M&A advisor—can surface additional buyers, increase competitive tension, and improve terms.

Even if you ultimately transact with the original bidder, the presence of other interested parties often strengthens your negotiating position.

Firms like iMerge specialize in managing these processes for software and technology companies, ensuring that founders retain control while maximizing value.

8. Protect Confidentiality and Minimize Disruption

Engaging with a buyer—especially a competitor—requires careful handling of sensitive information. Before sharing any data, ensure that a robust NDA is in place and that you control the flow of information.

Limit internal disclosure to key executives, and avoid letting the process distract from day-to-day operations. A drop in performance during diligence can jeopardize the deal or reduce valuation.

Conclusion

Unsolicited acquisition offers can be exciting, but they require a disciplined, strategic response. By pausing to assess the buyer’s intent, benchmarking valuation, evaluating deal structure, and considering your broader options, you can make an informed decision that aligns with your goals.

Founders navigating valuation or deal structuring decisions can benefit from iMerge’s experience in software and tech exits — reach out for guidance tailored to your situation.