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Limited Auctions and Maximizing Company Value

By Generational Equity

Limited Auction

“Business owners that do not use professional guidance during an M&A event are at a serious disadvantage.” Why Should I Hire an M&A Advisor to Find a Buyer?

A time-honored truth for the M&A industry is the importance of securing the advice and guidance of experienced professionals in this field. Many business owners do not initially understand how much goes into this process. That is why we host complimentary executive conferences across the country, which offer a helpful overview. Indeed, numerous owners we’ve met in the past who sold their companies without professional guidance have said how they wished they had the kind of support Generational Equity provides when selling a company.

The reason for this is simple: the knowledge that you are working with an advisory firm convinces buyers they may need to pay a premium for your business.

An M&A consultancy firm for business owners looking to sell is like the navigator on a ship. They help you reach your destination as quickly and smoothly as possible, all with the aim of discovering your ‘treasure’: the optimal value for your company.

On your journey, your professional team will help you navigate every stage, including the subject of this piece: a limited auction. A limited auction (also known as a targeted or controlled auction) plays a pivotal role in maximizing the value of your business among buyers, and helps to identify the ideal buyer for your company going forward.

So, what is a limited auction? As Divestopedia notes:

“A [limited] auction is a process which focuses on a limited amount of bidders for an acquisition of a company… A targeted auction weeds out buyers that are not a fit quickly compared to a broad auction which approaches all potential buyers in the market regardless of fit.”

Therefore, once your company is ready for sale (the end goal of our process to build a ‘buyer-ready’ business), our dealmakers at Generational Equity will setup a limited auction, creating a competitive bidding environment that will invariably increase your company value. Generating this atmosphere in front of carefully-selected strategic and/or financial buyers will instantly make your business more sought-after.

The Best of Both Worlds

A limited auction is not the only sales process available to those selling their business: there are also broad auctions (which have a large volume of bidders) and targeted solicitation (approaching a smaller group of buyers). While all three have advantages and disadvantages, there is a reason why limited auctions are the preferred approach in middle-market M&A. That is because it provides the best overall solution to the following concerns:

  • Time it takes to complete a deal
  • Confidentiality
  • Maximizing business value

For instance, a broad auction places your business in front of more prospective buyers. But, this is more likely to compromise the confidentiality of your company’s status. On the other hand, targeted solicitation is significantly more confidential, but no competition means you are unlikely to secure the optimal price for your business.

A limited auction offers the best of both worlds, and is the ideal approach to securing the right deal for your business. Your business is presented to a reasonably small but highly interested group of buyers, you minimize the risk of confidentiality, and improve your odds of identifying the right buyer in the shortest time.

This is especially true if you are working with skilled professionals, like our team at Generational Equity.

Why?

Because setting up a successful limited auction relies on two important details:

  1. A full understanding of the seller’s goals.
  2. The ability to maintain complete control of the process.

Our approach covers both considerations. Our comprehensive valuation process and regular communication with clients ensures that we know what they are looking for, which determines the buyers we include in the auction. In addition, thanks to our extensive database of over 34,000 business buyers, we have the resources to identify what buyers will be the best fit for your company.

We maintain a strong relationship with buyers through DealForce, our proprietary, effective middle-market portfolio of businesses across a broad range of industries. And, thanks to our reputation in this market, when buyers learn you are working with us, they are inclined to increase their bids compared to what they would offer if you were approaching this alone. Even the illusion of a limited auction can be a powerful tool in securing the best deal for your company.

If you’d like to discover more about limited auctions and other elements of our dedicated M&A process, attend one of our executive conferences. Here, we discuss how to develop a successful exit strategy, from an initial valuation and enhancement techniques, all the way to deal closure. In addition, you can discuss your goals with our experienced professionals, who are keen to learn more about your business and where you see yourself in five years, ten years and beyond.

For more information on our process or to find an executive conference near you, contact us today on 972-232-1121.

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Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!
Andy Graham, Vice President, Modern Heating & Plumbing
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.
Karen S. Williams, CFO, BW Manufacturing
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”
Karen S. Williams, CFO, BW Manufacturing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.
Michael J Polarek, President, Paragon Packaging
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.
Michael J Polarek, President, Paragon Packaging
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates