What Does
Sale Process Mean?
A sale process is conducted by a business broker or investment banker when they are engaged in a sell-side assignment. The sales process is a systematic approach to selling a business, and its primary purpose is to find the most effective way to meet the pre-determined objectives of the seller.
The following types of sale processes can be employed depending on the objectives of the seller:
- Full auction process – approaching all potential buyers in the market;
- Limited competitive auction process – approaching a few logical best buyers; and
- Negotiated sale process – negotiating a transaction with only one party.
Advisory on Sale of Business – Sponsored by Stone Oak Capital Inc.
Click Here for Sell-Side Advisory From Stone Oak
Divestopedia Explains Sale Process
A company owner must weigh the following objectives when determining which sale process is most appropriate:
- Keeping the sale of the business confidential from competitors, customers and employees;
- Maximizing the potential sale proceeds; and
- Finding the right buyers for the business.
Regardless of which type of sale process is conducted, the following stages are typically executed:
- Analyze and value the company – set the price expectations and understand the seller’s objectives;
- Develop the marketing material – prepare a confidential information memorandum and a list of potential buyers;
- Approach potential buyers – manage the flow of information and qualify the buyers. In a full or limited competitive auction, creating competitive bidding is essential;
- Evaluate offers – assess each buyers’ price, structure, conditions and financial capability to close the transaction; and
- Execute the transaction – manage the due diligence and finalization of a purchase and sale agreement.