Bidding process

A bidding process is a method used in the sale of companies. It enables sellers to structure the sales process efficiently and carry it out to their advantage1. The main objective of a bidding process is to attract several interested parties in competition to buy the company and thereby maximise the sales proceeds.

A bidding process goes through several phases:

1. Firstly, the sale advertisement is published with reference to the bidding process.
2. The viewings then take place, usually in a group.
3. The prospective buyers then submit their bids within a specified period.
4. Depending on the procedure, the prospective buyers can be informed of the current highest bids so that they can bid again.

The main disadvantages of a bidding process are that there are too few interested bidders or potential bidders reject a bidding process (e.g. cannot keep to the schedule or reject bidding processes in principle).

It is important to note that a bidding process is an alternative to a classic M&A process when selling a company. It often takes the form of a structured M&A process and a limited number of bidders. The number of bidders is reduced as the M&A process progresses.