What competition is actually worth
A process with several credible bidders clears materially higher than the same asset sold to one buyer. In the middle market the gap between the highest and lowest credible bid is commonly thirty percent or more, and capturing the top of that range is what a process is for.
This is the one lever that does not require changing the business. Everything else that moves the price takes two to four quarters. Running a competitive process takes four to eight months and is the last decision a seller makes.
Choosing the shape
A broad process approaches fifty to a hundred names. It maximises the chance of finding the outlier bidder and it maximises leakage, management distraction and the number of parties who learn things about your business without buying it.
A targeted process approaches fifteen to thirty carefully chosen names. This is the usual answer for a technology divestiture, because the credible buyer field at this size is rarely larger than that, and control matters.
A limited process approaches three to five with known interest. Lower risk, and materially less tension. It is the right answer only where confidentiality clearly outweighs price, which is rarer than sellers under pressure believe.
A working timetable
Sixteen to twenty weeks from launch to signing for a prepared asset.
Weeks one and two, teasers out and non-disclosure agreements executed. Weeks three and four, the memorandum to those who engage. Weeks five to eight, management presentations, scheduled inside a compressed window rather than spread out. Week nine, indications of interest due on a fixed date.
Weeks ten and eleven, evaluate and shortlist three to five. Weeks twelve to sixteen, confirmatory diligence and further management access for the shortlist. Week seventeen, binding offers. Weeks eighteen to twenty, final negotiation and signing.
The dates being published and held is what makes the process real. Bidders who believe the deadline will move behave accordingly, and the behaviour shows up in the first envelope.
Managing what each side knows
Every bidder at the same stage receives the same material at the same time. Asymmetry creates both legal exposure and the suspicion, once discovered, that the process was not straight.
Disclosure is staged. Broad material early, detailed contracts and technology at the indication stage, customer-level and pricing detail only after a letter of intent. Where a bidder is a competitor, hold the last layer longer.
Competitive signalling is the adviser's most delicate task. Bidders should understand that a real process is running without learning the terms of any specific offer. Say too little and a bidder assumes they are alone and bids accordingly. Say too much and you invite either a disengaged response or a coordinated one.
All questions run through one channel with consistent answers. Bidders compare notes more often than sellers expect.
The mechanisms that do the work
Process letters at each stage, setting out exactly what an offer must contain and how it will be assessed. This is what makes bids comparable, and comparability is what allows a seller to negotiate on structure rather than only on price.
A best and final round, inviting the top two or three to improve within a tight window. Used once it is effective. Used twice it reads as an inability to decide, and bidders start withdrawing.
Parallel negotiation with the top two rather than granting exclusivity to the highest indicative number. Indicative bids cost nothing to make and are easy to withdraw, and the bidder who wants exclusivity wants it because it removes the other one.
How processes fail
Retrading, where the winning bidder reduces their offer during confirmatory diligence on the strength of something they found. Almost always preventable, because almost always the thing they found was discoverable during preparation.
Bidder fatigue. Too many rounds and the disciplined bidders leave first, which is the opposite of the intended selection.
Duration. A process that runs past six months is exposed to a change in market conditions, a change in a bidder's own circumstances, or a leak. Speed is a form of risk management.
A field that turns out to be one buyer. If bidders drop away and one remains, the seller is no longer running a process. They are conducting a negotiation from a weak position, and the honest response is usually to pause rather than to continue pretending.
What the adviser is for
Timetable, information flow, bidder management, and the coaching that means the management team performs on the day. Most of the value is in the parts that are invisible from outside: which names to exclude, when to release what, and when to tell a seller that the number in front of them is the number.
Editorial Team · Published for orientation, not as advice on a specific transaction. Any figure cited is orientation, not a valuation. See market notes.