Selling vs Sale: The Language, Psychology, and Reality of Exiting a Company
The language founders use to describe their exit often reveals more than they realise. Some speak of "being bought" as if the transaction happened to them. Others speak of "selling" as an active choice they made and controlled. This linguistic distinction reflects a fundamental strategic difference that translates directly into valuation outcomes.
Founders who wait to be approached and respond reactively to inbound interest systematically achieve worse outcomes than those who prepare, position, and run competitive processes. The difference is not marginal. Research consistently shows that active approaches generate 50 to 100 per cent more value than passive ones. The psychology of "being bought" versus "selling" determines which outcome founders experience.
The Mindset Gap: Being Bought vs Selling
The "being bought" mindset emerges naturally when an acquirer makes unsolicited contact. A founder receives a call or email expressing interest in acquisition. The buyer frames the conversation around what they want to achieve and what they might be willing to pay. The founder evaluates whether the opportunity is attractive and decides whether to engage.
In this frame, the buyer controls the process. They determine the timeline, set the initial valuation expectation, and drive the diligence agenda. The founder reacts to buyer requests rather than shaping the transaction. If the deal progresses, it progresses on the buyer's terms. If it stalls, the founder has no alternatives because they never created any.
The "selling" mindset starts from a different position. The founder decides they are ready to explore an exit. They prepare the business for sale, develop materials that position the company effectively, and engage multiple potential buyers simultaneously. They create a timeline that serves their interests and maintain leverage throughout the process by preserving alternatives.
In this frame, the seller controls the process. Multiple buyers compete for the opportunity. Each knows that others are interested, creating pressure to offer compelling terms. The seller can compare offers, negotiate improvements, and walk away from buyers who do not meet standards. The dynamic is fundamentally different, and the outcomes reflect that difference.
The 50 to 100 Per Cent Premium for Active Selling
The value difference between these approaches is substantial and well-documented. Research from Focus Bankers indicates that competitive sales processes can result in 50 to 100 per cent increases in offers compared to proprietary sales.
This finding merits careful consideration. A founder who responds to inbound interest and negotiates with a single buyer might achieve a $20 million outcome. The same founder, with the same business, running a competitive process might achieve $30 million to $40 million. The difference is purely process. The business has not changed. What changed is how it was presented to the market.
The premium reflects basic economics. When a single buyer knows they face no competition, they have no reason to offer their best price. Their goal is to acquire the asset at the lowest price the seller will accept, not at its full market value. Every dollar they save on purchase price flows directly to their returns.
When multiple buyers compete, the dynamic inverts. Each buyer knows that offering too little risks losing the opportunity to a competitor. They bid against each other rather than against the seller's reservation price. The seller captures the incremental value that competing buyers are willing to pay.
Why Passive Responses Underperform
Beyond the absence of competitive dynamics, passive responses to inbound interest create several disadvantages that compound through the transaction.
No leverage exists when there are no alternatives. A buyer who knows they are the only option can make aggressive demands on terms, timeline, and price adjustments without fear of losing the deal. The seller has no credible threat because walking away means returning to a situation where no transaction exists.
No preparation means scrambling through diligence. Founders who respond to unexpected interest typically have not organised their data rooms, normalised their financials, or anticipated buyer questions. This disorganisation extends the timeline, creates opportunities for price reductions based on "findings," and signals operational immaturity that affects valuation.
No positioning means accepting the buyer's narrative. Without preparation, founders react to how buyers characterise the business rather than shaping that characterisation themselves. If a buyer views the company as a mature asset worth a modest multiple, the founder lacks the prepared materials and competitive alternatives to argue for a different framing.
No timeline control means extended uncertainty. The buyer sets the pace, which often means extended diligence, delayed decisions, and prolonged periods where the founder's attention is divided between running the business and managing the transaction. This uncertainty takes a toll on both the business and the founder personally.
The Complexity Founders Underestimate
Founders who approach exits passively also tend to underestimate transaction complexity. Modern M&A involves numerous mechanisms that affect what the seller actually receives, and navigating these mechanisms requires experience that most founders lack.
BCG research on deal timelines found that approximately 40 per cent of transactions take longer to close than the timeline estimated in the deal announcement. Among delayed deals, nearly two-thirds require an additional three months or more beyond the original timeline. Founders who expect quick closings often find themselves managing extended processes that strain both the business and their patience.
Working capital adjustments are now virtually ubiquitous, present on more than 90 per cent of private target M&A deals. The average adjustment owed to buyers is roughly 0.9 per cent of transaction value. In a $50 million deal, that represents $450,000 flowing from seller to buyer at closing. Founders who do not understand working capital mechanics often find their proceeds reduced by amounts they never anticipated.
These complexities punish unprepared sellers disproportionately. A founder who has studied working capital patterns, established appropriate targets, and negotiated clear calculation methodology protects value. One who accepts whatever the buyer proposes loses value through mechanics they do not understand.
Converting Inbound Interest Into Process
Inbound interest is not a problem to be managed. It is an asset to be leveraged. The key is recognising that an expression of interest creates opportunity but does not obligate response on the buyer's timeline or terms.
When an acquirer makes contact, founders should take time to evaluate before engaging. Is this a serious buyer or a competitor fishing for information? Is the business ready for a sale process? What would a successful outcome look like? Answering these questions before responding prevents premature commitment to a process that may not serve the founder's interests.
If the interest is genuine and the timing is reasonable, the inbound becomes a catalyst for a proper process. The existence of interested buyer validates that a market exists. That validation supports outreach to additional potential acquirers who might offer better terms. The original buyer may still win the process, but they will compete on terms rather than dictate them.
Engaging an advisor at this point is often valuable. An advisor can assess the seriousness of the inbound interest, identify additional potential buyers, and structure a process that creates competitive dynamics without alienating the original interested party. The advisor brings experience in managing these situations that most founders lack.
Building the Active Exit
An active exit process involves deliberate steps that create leverage and protect value throughout the transaction.
Preparation comes first. Before engaging any buyer, founders should organise their data rooms, normalise their financials, and develop materials that position the business effectively. This preparation typically takes several months and should ideally be complete before conversations with potential acquirers begin.
Buyer identification and outreach create the competitive dynamic. Advisors develop a target list of potential acquirers based on strategic fit, financial capacity, and historical acquisition behaviour. Outreach to these parties occurs simultaneously, ensuring that multiple buyers evaluate the opportunity on parallel timelines.
Process management maintains leverage throughout. The advisor structures timelines that keep buyers moving forward together, prevents any single buyer from gaining an advantage through extended exclusivity, and ensures that the seller always has alternatives if negotiations with any particular buyer stall.
Negotiation on terms protects the value created through the competitive process. Working capital targets, earnout structures, escrow provisions, and indemnification terms all affect the seller's actual proceeds. Experienced negotiators know which terms are standard, which represent overreach, and where value can be preserved through careful attention.
The transition from "being bought" to "selling" is fundamentally a choice. Founders who recognise that they control whether to engage, when to engage, and how to structure the process can capture the full value of what they have built. Those who react passively to buyer interest routinely leave 50 per cent or more on the table.
The choice often feels less clear in the moment. An interested buyer seems like an opportunity not to be missed. The founder feels flattered that someone recognises the value they have built. The temptation to engage quickly and see where it leads is strong. But that instinct, while understandable, consistently produces inferior outcomes compared to the discipline of preparation and process.
If you have received inbound interest or are considering whether the time is right to explore an exit, we would welcome a confidential conversation about how to approach the situation effectively.