With profit levels and confidence returning to the recruitment sector, unsolicited M&A approaches by potential buyers are coming back into fashion. Whilst this is positive news for ‘exit-minded’ owners, there are many pitfalls when responding to such approaches. Here are some best practice ‘pointers’ for owners on how to respond to an unsolicited approach.

1.  Filter out time-wasters by assessing the credibility of the potential bidder before agreeing to a meeting. Have they ever made acquisitions before, do the individuals appear credible, and do they have the funds to deliver on an offer? If you feel unconvinced, chances are that a meeting will probably be a waste of time or worse a distraction at a time of growth.

2.  Plan for the meeting by knowing up-to-date, high level analysis about your business such as the split of NFI & NFI% by division/ desk and by territory. You should also get ready to outline your growth plans to a level of detail that is informative but not commercially sensitive. And prepare some questions to ask your audience about their business – this always goes down well and will help to ‘equalise’ the meeting.

3.  Control the meeting by having it at your own offices, by inviting a trusted colleague or advisor for support, and by sticking to a clear discussion agenda. Be open but always feel free to duck any question that feels too ‘searching’ - and (golden rule) never discuss valuation or deal structure at such an early stage (even though any bidder worth its salt will try to draw you into doing so!).

4.  Ask for an initial written offer as the next step following the first meeting if they remain keen. Avoid all further discussions until you have this offer letter safely in hand. This written offer should include an indicative valuation, proof of funding, and all other acquisition terms that the bidder has in mind. Having an initial written offer provides both formal certainty of their interest and a clear basis from which to begin negotiations towards an improved final offer.

5.  Assemble your deal team, which would normally include your managing director (if you are outside of the business), finance director, M&A lead advisor and lawyer. This deal team will be able collectively to advise you on the merits and the tactics of completing the deal with the initial bidder or on ‘widening the field’ by speaking to other potential bidders.