What Does Proprietary Deal Mean?
A proprietary deal lets a specific buyer have a first chance to purchase a company before the company is presented to other buyers by the owner or an investment banker. Proprietary deals are often presented to specific buyers based on their perceived fit with the seller. While proprietary deals can be cost effective and closed more quickly than an auctioned process, the total purchase price and/or overall deal structure may not maximize value for the seller.
Divestopedia Explains Proprietary Deal
Patient sellers may be better off undertaking a competitive bid process or controlled auction, rather than getting marketed as a proprietary deal. Oftentimes, investment bankers will offer a company as a proprietary deal to a buyer with whom they already have a relationship with in order to get a rapid close and commission. This strategy may not necessarily align with the seller's objectives, as other buyers who do not know about the opportunity may be willing to pay a higher multiple, structure a cleaner transaction with more cash consideration or simply be a better fit for the seller.