Ufo Preparation
Canonical: https://tuckadvisors.com/ufo-preparation
Last updated: 2025-12-16
Content
Be Prepared for a UFO™
Unsolicited Flattering Offer
The number one axiom in M&A: Time Kills Deals.
The "Show-Me" Mindset
When you receive an unsolicited offer, adopt the "Show-Me" attitude. Don't accept claims at face value — make them prove it with real terms, real timelines, and real commitment.
The slogan is attributed to Missouri's U.S. Congressman Willard Duncan Vandiver, who served from 1897 to 1903. At an 1899 naval banquet in Philadelphia, he declared:
"I come from a state that raises corn and cotton and cockleburs and Democrats, and frothy eloquence neither convinces nor satisfies me. I am from Missouri. You have got to show me."
Important Note
Revenue growth and profit margin/growth are both important. In general, growth rate is more important for earlier-stage companies and profit for later-stage companies. Selling a company that is still losing money is a lot harder than selling a company that is making money.
Key Preparation Steps
Accrual Basis Accounting: Be on accrual basis accounting, not cash. 99% of the time, the company that buys yours will be on an accrual basis, and that's the way they will want to view your financials.
QSBS Election: When starting your company, set yourself up for a QSBS election to avoid paying taxes when you sell.
Board of Directors: Ensure all employees and contractors sign NDAs and assignability of IP/work agreements.
Financial Statements: Have P&L statements for prior years (up to 5 years), a forecast for the rest of this year and next year (that you are willing to stand behind), and a Balance Sheet ready to go.
Cap Table: Make sure your Cap Table is up to date.
Organization Chart: Maintain an updated organization chart.
Quality of Earnings: Prepare for a quality of earnings analysis.
Advisory Team: Have a team of advisors ready to act, including an M&A advisor, an M&A lawyer, an M&A tax advisor, and an M&A CFO (who can advise on a Net Working Capital peg).
Post-Transaction Planning: Be clear on how the business will run post-transaction. Will you, the Founder/CEO, stay on or is there someone else in your organization (COO/President) who can run it if the new owner needs someone to stay in place?