The Up- and Downside of Selling Your Business To a Direct Offer

In most transactions, we advocate for a structured go-to-market process to create competition and maximise value. Occasionally, however, a different path unfolds: a credible buyer approaches directly.

In a recent transaction in the logistics and IT services sector, the shareholders were approached by an existing client interested in acquiring the business. What followed offers useful lessons on decision-making, trade-offs and the realities of deal execution in selling your business.

The Initial Approach

The buyer’s initial indication of value was around R55 million. Rather than immediately launching a full market process, the shareholders wanted us to assess the offer's credibility, test assumptions and negotiate improved terms. Through structured engagement and disciplined negotiation, the price was increased to approximately R80 million.

The final structure included roughly R50 million upfront, with the balance deferred. This introduced both opportunity and risk. Deferred consideration can align incentives and enhance total value, but it also transfers part of the risk back to the seller.

The Core Strategic Question

The central decision was whether to accept and optimise the existing opportunity or pause the process and run a broader market approach.

A full market process could potentially have delivered a higher headline valuation. It might also have improved the upfront cash component. However, that path would have introduced:

• Longer timelines

• Higher execution risk

• Potential confidentiality exposure

• The possibility that no superior offer would emerge

The shareholders ultimately prioritised certainty, speed and a clean transaction over the possibility of incremental upside.

The Role of Advisor Behaviour

An important but often overlooked factor was conduct. In situations where a seller has an existing relationship with the buyer, heavy-handed tactics or ego-driven positioning can derail negotiations. In this case, our team maintained a measured, facilitative approach. The focus was on improving terms without destabilising the commercial relationship between buyer and seller.

This balance helped preserve trust while still delivering meaningful uplift in value.

What Could Have Gone Wrong

Private approaches frequently fail. Buyers may withdraw after due diligence, and valuations can be re-traded, and terms can become more onerous once exclusivity is granted.

There is also the unknown: without exposing the opportunity to the wider market, sellers cannot know with certainty whether they have left value on the table. In this case, it remains impossible to determine whether a competitive process might have yielded R100 million, for example, rather than R80 million, or a higher upfront cash component.

That uncertainty is inherent in the decision not to run a formal auction.

Outcome and Reflection

The transaction concluded relatively quickly and without significant disruption to the business. The shareholders achieved a substantial increase from the original offer and were satisfied with the outcome.

The key learning is not that private approaches are superior to market processes, nor that auctions are always necessary. Rather, it is that each situation requires careful evaluation of:

• Certainty versus potential upside

• Speed versus competitive tension

• Relationship preservation versus aggressive value maximisation

• Cash upfront versus deferred consideration

Hope is not a strategy. But neither is rigidity.

When a credible buyer knocks, the correct response is not automatic acceptance or automatic rejection. It is disciplined analysis, structured negotiation and a clear-eyed understanding of trade-offs.

In this case, a deal that worked for our client was achieved. Whether it was the absolute maximum available will never be known. What is clear is that informed decision-making, rather than impulse or ego, shaped the outcome. 

About Deal Leaders International

Deal Leaders International (DLI) is a boutique sell-side M&A advisory firm specialising in helping business owners and executives, with a business EBITDA between R20 million and R300 million per year, engineer their growth-to-exit journey.  

We go beyond traditional advisory services, partnering with our clients to design, execute and optimise strategies that achieve maximum value when selling their businesses.  

Our mission is to empower our clients to achieve outcomes that align with their financial, professional and personal goals while positioning their businesses as highly attractive to the right buyers.  

As the Africa representative of the Pandea Global M&A Network, we offer our clients both local and international expertise and experience. With 69 offices in 34 countries, and over 2500 successfully completed transactions with a combined deal value over €30 billion, DLI offers deep market insights, practical expertise and a results-driven approach to prepare and successfully execute on business growth and exit strategies.