Offers & due diligence
How can I tell whether an unsolicited offer reflects fair market value?
Four checks to judge an unsolicited offer, the signals that it sits below market, and the only reliable way to know for sure.
By Michael D. Rubin, CEO & Founder · September 2026 · 885 words
You can get a first read by converting the offer into a multiple of your adjusted EBITDA and checking how much of it is cash at closing, but the only reliable test of fair market value is what other qualified buyers would pay for the same company. An offer made in private, with no competition, can be fair; it just cannot prove it.
Fair market value is the price a willing buyer and a willing seller would agree on, both reasonably informed and neither forced to act. An unsolicited offer falls short of that on one point by design: only one buyer is involved, so there is no market to measure against.
Check 1: Turn the offer into a multiple
Divide the offered price by your adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, with owner-specific and one-time costs added back. If a buyer offers $9 million and your adjusted EBITDA is $2 million, the offer is 4.5 times. Companies in the $3 million to $100 million revenue range most often sell for three to seven times. Then ask honestly where your company belongs in that range, given its size, margins, customer mix and how much it depends on you.
Watch which earnings figure the buyer used. Unsolicited offers are sometimes based on the profit on your tax return, or on the buyer's own estimate from the outside, which leaves out add-backs. Getting the earnings right can change the answer more than arguing about the multiple.
If you do not yet know your adjusted EBITDA, that is the first gap to close. Without it you cannot tell whether an offer of $9 million is 4.5 times real earnings or 6 times earnings that a buyer's accountant would later cut down.
Check 2: Separate cash from promises
An offer can show a strong multiple and still be worth much less if a large share is paid later and at risk. Compare offers on cash at closing first, then on the likelihood of receiving the rest.
- How much is paid in cash at closing?
- How much is a seller note, and is it secured?
- How much is an earnout, and who controls the results it depends on?
- Is there an escrow or holdback, how large and for how long?
- Does the price assume a normal level of working capital, and is the target defined?
Check 3: Look at the buyer and the timing
Ask why this buyer, and why now. A competitor may want your customers, your crews or your territory. A private equity group may need an add-on for a company it already owns. Someone may simply have noticed a strong year. A buyer with a clear strategic reason may be able to pay more than it has offered. Understanding its motive tells you how much room there may be, and which parts of your company it values most.
Also ask whether the buyer can fund the deal, and what it wants in exchange for looking closer. Never send detailed financials without a signed confidentiality agreement. The piece on selling confidentially explains why a buyer who learns your numbers without one holds an advantage whether or not a deal happens.
Signals an offer may be below market
None of these signals proves an offer is unfair, and a buyer can show several of them and still be acting in good faith. They are reasons to slow down and compare, not to walk away. Reply politely, say you are giving the offer serious thought, and take the time you need. A buyer that truly wants the company will usually wait a few weeks for a considered answer.
| Signal | What it may mean |
|---|---|
| A short deadline to accept | The buyer wants to avoid competition |
| Price based on tax-return profit | Your add-backs have not been counted |
| A large earnout or seller note | Risk is being shifted to you |
| Exclusivity requested before any diligence | Your leverage is being removed early |
| No evidence of funding | The offer may not be real |
| A low-end multiple for a strong company | The buyer is testing what you will accept |
Check 4: Test it against the market
The honest answer to whether an offer is fair is to put the company in front of other qualified buyers, confidentially, and see what they say. That does not mean rejecting the offer. The first buyer can stay in the process and may well win, sometimes on better terms once it knows others are looking. What changes is that you decide with a comparison in hand. The longer article on evaluating an unsolicited offer walks through how to respond without losing the buyer.
What we do in that situation
When an owner brings us an unsolicited offer, we start with a free, confidential discovery meeting and an opinion of value based on three years of financials, so you can see where the offer sits in a realistic range. If testing the market makes sense, we approach our own database of qualified individual buyers, capital groups and private equity groups using a blind profile, with a confidentiality agreement and financial profile required before any detail is shared. A formal business valuation is available separately if you need a documented figure. If you have an offer on your desk now, contact us before you respond to it.
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