A Private Equity Firm Just Made an Offer for Your Business. Now what?

For many business owners, it starts with a surprise email or phone call: A private equity firm wants to buy your company. You might not have been planning to sell, but a decision with life-changing implications is suddenly in front of you.

Private equity interest is growing. Record levels of private equity capital - more than $2 trillion in the U.S. alone - are targeting high-quality businesses.¹

Although being approached is flattering, for many owners the significant opportunity can mean complexity. Before you respond it’s worth understanding what this type of deal could mean both personally and financially. Here is how to take control should you get the call.

Why the Letter of Intent Matters—and What It Really Determines

Once talks begin, the PE firm will conduct due diligence, requesting detailed historical financials, future projections, and customer or supplier data. The goal is to get to a letter of intent (LOI)—a non-binding document that outlines the basic terms of a deal.

Even though the LOI is not a final contract itself, parts of it are binding. Consider it a framework for the deal ahead. It can, for example, prevent you from talking to other potential buyers, and it can set a price that may later change. For this reason, you should have legal representation before signing anything.

Owners have the most leverage before signing an LOI. It’s that crucial moment when opportunities present themselves but missteps can be made. Make sure the proposed valuation justifies giving the buyer exclusivity, and don’t fixate on price alone—contract structure and other finer deal points can matter just as much.