Bidding Strategies in M&A Auctions: Planning and Executing Winning Bids, Minimizing Costs of Losing Bids

Sellers of businesses use M&A auctions to maximize the selling price of their business and to obtain more favorable deal terms. In effect, auctions allow sellers to create a virtual market for their businesses with at least the appearance of vigorous competition among bidders—and provides sellers with greater deal leverage.

And for bidders in M&A auctions, overcoming the seller’s deal leverage is key to a successful outcome. The bidder’s challenge is to balance two competing goals—winning the bid (but on acceptable terms) and minimizing the cost of losing the bid. There are some steps bidders can take to strike the right balance between these goals, including thoroughly reviewing the diligence materials, tailoring the bid to issues arising during diligence, and exercising restraint in early bidding rounds.

Counsel to bidders should guard against strategies sellers may use during the auction, such as refusing to grant exclusivity until late in the process (or not at all), to raise the price or improve deal terms.

Listen as our authoritative panel of deal attorneys examines steps bidders should take to ensure a strong position and increase the likelihood of a successful outcome during an M&A auction.

1. Sellers’ goals in auctions
2. Successful bidder strategies
   1. Consider the extent to which you will follow rules in seller’s bid package
   2. Review diligence materials
   3. Tailor bid to issues arising during due diligence
   4. Avoid low-ball or casual-pass offers
   5. Exercise restraint in early bidding rounds
   6. Make an alternative bid proposal
   7. Provide deal closing certainty
   8. Identify and act on shifts in deal leverage

The panel will review these and other high priority issues:

• What are the advantages to a business seller of using an M&A auction process when selling the business?
• What strategies have been successful for bidders to obtain a successful outcome in an M&A auction?
• How can sellers maximize their deal leverage during various stages of the M&A auction process?
• How can bidders take advantage of shifting deal leverage as the M&A auction progresses?