The Value of a Mergers & Acquisitions Auction Process

There is a saying in the merger and acquisition world, “One buyer is no buyer!”


A common regret of a business owner, who negotiates their own deal, is they wonder if they short-changed themselves post-sale.

Buyers are searching high and low for deals. They are hiring buyer representatives that cold call business owners in hope of making a love connection.

Most of our clients have received at least one, if not many, of these solicitations. 

The problem is most business owners have no idea how go through this process correctly.

They don’t understand the value of their business and have no idea how to negotiate or structure a deal to mitigate taxes. And, they certainly don’t have access to buyers. So they lock onto the one buyer who calls.

We have had clients who previously tried to sell their business without representation. They spent an enormous amount of time and energy negotiating with one buyer and then the deal falls apart.

If you are ready to exit your business it is critical to have representation that will present your business to multiple buyers because competition drives deals.

It is equally important to understand the value of your business before you entertain offers.

If you don’t know what your business is worth how will you know if the offer is good or if the buyer is a bottom feeder and trying to steal your business?

One of our clients, who was told by their CPA that their business was worth less than $10MM, almost decided not to go to market. Working with our team they ended up with a $25MM plus deal. No small potatoes!

Another client previously negotiated a deal on his own and the buyer wanted to structure the deal as a stock sale with a 338 (h) (10) election, which provides a great benefit to the buyer as they then have the benefit of a step up in basis on the assets.  The seller, however, has the potential of a higher tax burden with this election unless they have a strong negotiator who mitigates the tax impact. Luckily, the deal never consummated.

Multiple buyers drive the deal not only in price, but also in all the other aspects that need to be strongly considered when selling a company – terms, tax mitigation, corporate culture, etc.

Selling your business is not the time to be monogamous. There are plenty of fish in the sea.

Don’t spend your post-sale life wondering if you could have gotten a better deal. A good M&A firm will give you invaluable peace of mind by helping guide you through the exit process to determine the right buyer and selling price for you.

Keep reading:

An Exit Strategy is Good Business Strategy – Why You Need a Plan Today!

An exit plan aligns an owner’s business, financial, and personal goals and is a living document, so it is continuously revised as the business scales. It serves as a guide for the business owner as they prioritize critical decisions to scale the company. This ensures that as the company grows transferable value is increased and the business will attract investors when they go to market.

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