As you explore the sale of your business, you’ll likely hear that you should consider an auction process. What exactly is an M&A; auction, why run one, and when is an auction process not advisable for the situation?

What is an M&A; Auction?

An M&A; auction process is led by an investment banker with the goal of attracting multiple potential buyers for your business. It’s very structured – going far beyond a few casual conversations with a handful of potential buyers. A proper auction employs rigid deadlines and is intended to result in multiple letters of intent (or even purchase agreement proposals in some cases) – all based on the same set of information. An auction puts power into the seller’s court because competing buyers are forced to put forth their best offers and negotiate in valuable faith.

It usually works something like this: you and your deal professionals develop a list of potential buyers, typically including strategic buyers (competitors, customers, suppliers and others in your industry), as well as financial buyers (private equity, or for smaller deals,



perhaps high-net worth individuals). Your investment banker sends them a “teaser”, or generic description of your business and desired transaction.

A buyer who wants to learn more is required to execute a non-disclosure agreement, after which they’ll receive a detailed confidential information memorandum (CIM) describing your business. Your investment banker also communicates deadlines for each step in the process, including initial indications of interest, preliminary access to your data room, management presentations, site visits and letters of intent.

This sounds like a lot of work – and it is. Why engage with multiple possible suitors, especially if you believe you already know who your buyer will be and when you may even have a preliminary proposal on the table? Because when the situation is right, an auction can result in numerous added benefits for the seller relative to non-auction situations.

📌 Selling Your Business – The M&A Auction Process (India)
🏢 Linden Law Partners
📍 India