Does anyone have experience with competitive bids?

April 08, 2021
by a searcher from Tulane University - A. B. Freeman School of Business in Austin, TX, USA
My Partner and I have seen an increase in deals with expedited closing timelines. Has anyone else noticed this or purchased a business under these conditions?
As self-funded searches are we at a disadvantage in competitive processes?
What are some strategies to approach these type of deals?
in New York, NY, USA
From what I understand, the SBA process can take a while, so I would think that would be a disadvantage, but interested to hear if others have mitigated that. FWIW, the competitive situation is almost always intended to increase certainty of close and purchase price. Good sell side bankers are adept at "walking" the bids up.
Every deal is different and intricate in its own way. A buyer with good deal instincts is generally able to build a strong relationship with the seller and banker, and determine how much influence the banker has on the seller's ultimate decision. They can sniff out where other parties are in the process and where they stand relative to others. They know when to push the gas pedal and when not to.
Baseline strategies to differentiate your bid are: (a) show you've done the initial work in coming up with your valuation and why this company is "the one", (b) have strong evidence supporting your valuation in the bid, (c) have a solid work plan and timeline for business and confirmatory diligence, (d) have evidence of funding.
Happy to chat more, if you'd like.
in New York, NY, USA