At the start of most engagements, clients usually ask us how many potential buyers we plan to contact. The basic answer is simple and straightforward. However, the risks and benefits associated with this question are significant, as discussed below.
The success of a sale process is greatly influenced by the manner in which this issue is handled. On the one hand, when more parties are given an opportunity to consider acquiring the company, there is a greater likelihood that an optimal buyer will be identified. An optimal buyer would be willing to pay the highest price and offer the most attractive terms and conditions. Conversely, when more parties are included in the sale process, there is a greater likelihood that the company’s sensitive competitive information could land in the hands of a party who would use said information in a manner to harm the company in the future.
We focus on two factors when dealing with this issue. First, we only contact parties that would potentially be optimal buyers for the business. We avoid contacting buyers that we know would not have a keen interest in our client, based on our daily activity of speaking with buyers around the world who have an interest in acquiring middle-market aerospace and defense companies. Second, we carefully manage the sale process to release sensitive information only as needed. Buyers hunger for information from the moment they gain interest in a company. Withholding too much information too early in the process will cause these buyers to become frustrated and walk away. Accordingly, we use our 23 years of experience selling middle market A&D companies to know exactly when a client needs to release sensitive information, and exactly what information to release at each stage of the sale process.
Have a great day everyone.
Bill Alderman
President
