Is Your Company Prepared for an Unsolicited Buyout Offer?

June 25, 2025  

At any time, and especially in a more heated M&A market, a company’s board of directors or its C-suite could receive an unsolicited acquisition proposal or inquiry. Management and boards of directors, who are responsible for reacting to such proposals, need to prepare for this possibility. In particular, a company’s general counsel plays a critical role in preparing for M&A activity and helping the company respond to the same.

Preparing in advance is key, in part because directors and officers generally have fiduciary duties to their company’s owners, and further because taking action in advance of receiving an unsolicited acquisition or merger proposal can reduce response time, lead to a smoother process, and ultimately lead to a better outcome for stakeholders.

Companies should take the following steps now so they are prepared to efficiently and effectively respond to an unsolicited acquisition or merger proposal.

  1. Select and Orient Your Deal Team

A prompt and effective response requires a multi-faceted internal deal team to be able to consider all aspects and angles of a buyout or merger offer. These professionals should know in advance that if an acquisition or merger proposal is received, they will be on the team to consider it, review responses, and recommend next steps. When determining the team, consideration should be given to who should be “under the tent” and for what purpose.

For example, while C-Suite members such as the CEO and CFO are usually heavily involved, it is advisable to bring in other experts, such as the general counsel, business development lead(s), and other key executives with expertise in finance, governance, and investor relations.

All members of the deal team should understand that the ultimate authority rests with the board in terms of signing off on a response to an acquisition proposal, and that they should not take any action to undermine that authority, such as dismissing, accepting, or negotiating an offer from the potential acquirer without first bringing the offer to the board for discussion.

Once the team is identified, members should meet in advance, discuss the possibility of a proposal, and work to develop a written playbook on how the company will evaluate any unsolicited acquisition proposal.

  1. Have Outside Advisors at the Ready

Companies of all sizes and types regularly rely on outside experts to guide them through mergers and acquisitions, as these are often bet-the-company situations. Companies that attempt to vet and hire critical advisors after receiving an acquisition proposal will often not have the time to thoroughly consider all choices or establish a strong working bond that is necessary for a smooth M&A process.

The board and senior executives should seek to identify advisors in advance that can help them through an acquisition bid, should one arise. These include legal, financial, and often proxy or communications advisors that have experience with M&A. Doing so in advance allows a company to understand who each advisor would staff on their services team and learn more about each advisor’s approach and cost. Further, it allows time for the advisors to get up to speed on the company’s business and to get to know the key members of the company’s internal deal team. Forging this bond and relationship will allow for inside and outside deal team members to understand each other’s working styles and establish together what will be vital for the company in evaluating an unsolicited offer.

Specifically, a company’s general counsel, who is intimately familiar with its business, legal and risk profile, should be the point person to identify outside legal counsel to support an M&A process and make those recommendations to the board. General counsel may also be involved in reviewing or negotiating arrangements with other outside advisors. Often, one outside law firm can handle the work for an entire M&A transaction, although it is not unusual to have multiple outside counsel involved in a deal, such as outside M&A counsel and separate outside regulatory counsel.

  1. Understand Your Company’s Value and the Overall M&A Environment

It is worthwhile for companies to have a regular pulse on their value should an unsolicited acquisition proposal materialize. This avoids the need for companies to scramble when they receive an unsolicited offer with a specific enterprise value or range for the company. A company’s sale or merger value at any given time is driven by its most recent financial performance. Acquirers look generally at the last 12 months of financial performance in setting acquisition prices (which are often based on multiples of EBITDA or adjusted EBITDA or annual recurring revenue figures).

In addition to financial profitability, value can be impacted by general economic and financial trends. When it comes to M&A, the overall M&A market will impact valuation. It is important for company boards, general counsels, and other senior executives to stay on top of industry and M&A trends to understand the M&A outlook for their company. Knowing which sectors are hot and how that is impacting deal multiples will help companies understand their value in any given market. Much of this M&A data is publicly available but also both financial and legal M&A advisors are normally on top of such trends.

Understanding the M&A environment is important when reviewing M&A letters of intent, which often include customary legal terms. General counsel and outside M&A counsel must stay abreast of market practices for legal M&A provisions (such as representation and warranty insurance, working capital adjustment terms, escrow terms and indemnification terms) and to share that data with the relevant deal team members as needed. This is necessary when evaluating an offer as a whole.

  1. Identify Key Supplier, Customer, and Employee Relationships

M&A transactions often have multiple options for structure. An unsolicited proposal may or may not identify a particular structure, but if it does, the target company can very often influence how a transaction is carried out. A key consideration in structuring a deal is picking a structure that will allow your company to maintain its strategic relationships with large or important suppliers, customers, and employees.

A company may also hold strategic licenses, permits or contracts that need to be preserved in a transaction. A general counsel or outside M&A counsel can lead a company’s efforts to identify these key relationships and assets in advance of a proposal and identify the best structure for a sale or merger of the company. Knowing this in advance will position the board and its senior management to craft a proposal response that is protective of the company. Taking this information into account should lead to a more productive discussion with an acquirer as deal negotiations proceed.

  1. Focus on Clean Up

As lawyers we know that companies always have clean-up activities on their long to-do lists. Acquirers generally scour company books, contracts, financials, and more digging for issues. Now is the time for clean-up activities.

Examples include making sure stock and ownership records are up to date and accurate, knowing where and how to find key contracts and licenses, addressing and trying to resolve litigation or claims that may be outstanding, making sure employee and contractor relationships are properly documented, and addressing any regulatory or compliance issues that a company may be experiencing. Much of this work will be led by a company’s general counsel or in-house legal team, but outside M&A counsel can also assist in the process when additional resources are needed.

As companies prepare, they should know that the market and legal developments often shift the focus of the acquirer’s due diligence. For example, in the past few years, areas of focus have included immigration matters, “me too” topics, ESG, AI, privacy, and cybersecurity. As 2025 has unfolded, the focus has changed: we are seeing greater attention paid to topics such as tariffs and importation of goods, diversity policies, government contracts, and government funding.  If these areas impact your company, spend the time in advance to understand where acquirers will focus and how to eliminate concerns that they may identify.

  1. Provide Regular Updates on M&A Activity

The board, as part of its general company oversight role, should always be considering whether an M&A transaction is the best course for the company or if the company has other preferred growth or strategic plans. This regular consideration of M&A as a strategic option by the board, together with the company’s outside advisors, will put the board and senior management in the best position to respond quickly should an unsolicited offer present itself.

Companies are always changing and evolving. In the same way, so does the M&A market. As part of satisfying their fiduciary duties of care, boards should stay in close touch with their inside and outside M&A teams to receive regular, updated information about market and industry trends.

General counsels are well positioned to help their boards understand and navigate fiduciary duties in the M&A context. Any deal process should start with an update to the board about fiduciary duties. In addition, the board may need to take important steps to satisfy its fiduciary duties (an example could be the use of an independent, special board committee). A general counsel will want to stay abreast of legal and case law developments to carefully navigate these topics when advising the board and the company in the M&A context.

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Though this is not an exhaustive list, boards, general counsel, and senior management that proactively address these areas can better position their companies to respond thoughtfully and quickly to unsolicited acquisition proposals, ensuring their decisions align with the company’s objectives, their fiduciary duties, and stakeholder interests.

About the Authors:

Jessica Fairchild, Partner and Co-Head of the M&A Practice Group, Croke Fairchild Duarte & Beres LLC

jfairchild@crokefairchild.com

Kyle Shires, Partner in the M&A Practice Group, Croke Fairchild Duarte & Beres LLC

kshires@crokefairchild.com

About Croke Fairchild:

A full-service law firm with offices in Chicago and Milwaukee, Croke Fairchild Duarte & Beres LLC is home to a diverse team of trusted advisors and counselors valued for their legal skill, intellectual curiosity, and commitment to forging pragmatic solutions. The firm’s clients include entrepreneurs, investors, growth-stage companies, family offices, businesses and Fortune 500 companies. Croke Fairchild is also a certified Women’s Business Enterprise and a member of the National Association of Minority and Women-Owned Law Firms (NAMWOLF). For more information, visit www.crokefairchild.com.