Capittal's view: what to do if a competitor offers to buy your company

Quick answer

Capittal's view is that an unsolicited offer from a competitor should be answered neither with a yes nor with a no, but by opening a controlled competitive process in which that buyer has to compete with others. Thank them for the offer in writing, do not hand over any information beyond what is already public until you have signed a reinforced NDA with non-solicitation of employees and clients, and require a written price indication, proof of funds and a timetable before opening the data room.

Why is my competitor offering to buy me right now?

The timing of the offer says more about the buyer than about your company. A competitor launches an unsolicited offer when something has changed on their side or when they believe they have spotted a weakness on yours. The useful question is not how much they are offering, but why now.

The usual reasons are these:

• They have closed financing or a fund has come into their share capital with a buy-and-build plan.
• They need your market share, your licence, your client portfolio or your technical team to deliver that plan.
• They have spotted a generational handover, the departure of a senior manager or a weak year in your accounts.
• They sense that another buyer is looking at you and want to block it before a process exists.
• They want your commercial information, and an offer is the cheapest ticket to get it.

None of these reasons is bad in itself. They all have the same practical consequence: the first figure a competitor puts on the table is designed to close quickly and without competition, not to pay market value.

What do I say in the first 48 hours?

Answer briefly, in writing and without figures. The purpose of that first reply is to gain time and control, not to negotiate.

• Thank them for their interest and say you will take it to the shareholders before commenting on anything.
• Do not comment on the figure. Do not say it is low, nor that it is interesting.
• Do not say the company is not for sale. That sentence closes the door and removes your options.
• Ask them to formalise their interest in writing, with a price range, structure and timetable.
• Appoint a single point of contact, ideally your M&A adviser, and redirect all subsequent contact there.
• Keep quiet inside the company. Only the people who strictly need to know should know.

When the point of contact becomes an adviser, the buyer understands there will be a process. That change of channel alone reorders the conversation and stops the informal calls to your team.

What information can I not hand over in the first conversations?

There is one rule: do not hand over anything that would help them compete better against you if the deal does not close. A competitor who does not buy is still a competitor, and keeps everything they have seen.

Out of the first conversations stay the named client list, margins by client and by product, agreed prices and terms, detailed monthly accounts, the cost breakdown, the commercial pipeline, the org chart with names and salaries, and the contracts with key suppliers.

Release the information in stages and make each stage cost the buyer something.

What clauses does the NDA need when the buyer is a competitor?

The standard NDA between parties that do not compete is no use here. You need a reinforced NDA and you need to sign it before the second meeting.

• Non-solicitation of employees for 24 to 36 months, with a list of key profiles and a quantified penalty.
• Non-solicitation of clients and suppliers for the same period, except for documented pre-existing relationships.
• Ban on direct contact with employees, clients and suppliers without the seller's written authorisation.
• Confidentiality of the very fact of the negotiation, not only of the documents handed over.
• Restricted use: the information may only be used to evaluate this transaction.
• A named, closed list of the buyer's people with access, extendable only in writing.
• A clean team for anything competitively sensitive: external advisers and executives with no commercial responsibility.
• Certified return or destruction of the information if the conversation breaks down.
• Penalty clause with a fixed amount, Spanish law and agreed jurisdiction.

An NDA does not prevent the damage: it makes it more expensive and gives you a route to claim. Real control still lies in deciding what the buyer sees and when they see it.

How do I spot that the offer is a fishing expedition?

A fishing expedition is an offer whose real target is your information, not your company. You spot it by the order of the questions and by what the buyer refuses to put in writing.

Two signals from the right-hand column are enough to stop releasing information. Three mean that conversation is not a transaction.

How do I turn a bilateral offer into a process with several buyers?

A negotiation with a single buyer is set by the buyer. A process with several buyers is set by the seller. The change takes weeks and does not require breaking off with whoever called you.

1. Value your company before replying, using normalised EBITDA and adjustments for net financial debt and working capital.
2. Prepare the information memorandum and a data room with folder-level permissions and access tracking.
3. Build a buyer list with non-competing trade players, foreign groups looking to enter Spain, funds with platforms in the sector and family offices.
4. Approach them in parallel within a closed time window, not one by one.
5. Set a deadline for indicative offers and communicate it to everyone, including the competitor who opened the conversation.
6. Keep that competitor inside the process, with no preferential treatment and the most restricted access of all.
7. Grant exclusivity only at the end, for a short period and in exchange for price and terms already agreed.

Capittal's criterion is simple: a competitor improves their offer when they discover they are not the only one, and the improvement is greater the sooner they discover it, provided they have not yet seen your sensitive information.

What should I require before opening the data room?

Four things, all in writing and all before the first access.

• Price indication. Value range, payment structure (cash, deferred, earn-out, debt assumed) and calculation basis, normally enterprise value on a cash-free, debt-free basis.
• Proof of funds. Available cash, investment committee approval or a letter from a financial institution.
• Timetable with milestones. Binding offer date, duration of the due diligence and target signing date.
• Decision governance. Who decides, which body approves and which regulatory or antitrust clearances are needed.

If a buyer will not put a price in writing, they are not buying. They are looking.

What is the next step if the offer is already on the table?

Before answering a competitor it is worth knowing what the company is worth outside that conversation. Capittal Transacciones prepares confidential valuations for owners who have received an unsolicited offer and want to test it against the market before deciding anything. We work on transactions in the approximate range of 3 to 250 million euros, with direct partner attention and eight offices: Barcelona (head office), Madrid, Girona, Lleida, Tarragona, Palma, Zaragoza and Valencia. We are part of the NRRO group.

The first conversation is confidential and does not commit you to starting any process. If the conclusion is that the offer is already a good one, that is a valid answer too.