‘AUCTION’ THE UGLY PROCESS FOR BUYERS

Once the preparation for the sale of a Company is complete, the major decision becomes what “auction” path should the sale process take. Auctions in the M&A Process are focused on eliciting competitive bidding among interested parties to facilitate the sale of a business at the highest price and on the best possible terms.

The formal or controlled auction is based upon sending standardized company materials to a large audience, providing the targets with specific dates of management meetings and timing for which offers are due. This formal process can lead to very positive results when the business is unique, with few buyers.

An informal or negotiated auction, however, may offer the best approach to the sale of Middle Market companies. This approach does not have the typical deadlines for Expressions of Interest and Letters of Intent, but allows more flexibility for the sellers to interact with the buyers.

Prospective buyers do not like auctions and some buyers may refuse to participate. Generally considered an efficient and effective process for selling a business, auctions will most likely maximize the transaction value for sellers of Middle Market businesses.