Why M&A Plays

Bidding Management

"See how to establish and maintain a competitive process. Learn how to prepare and structure sales approach. Emerge and manage competition."

About the play

Establishing and maintaining a competitive process requires preparation and a structured sales approach. Competition will then emerge and then be managed. 

Additional interested parties may show up during the process, and if they do, that is positive, as these are often the most interested groups. 

How to handle such parties depends on how far the process has gone, how many are involved, etc. To a certain extent, the appearance of such bidders at too late a stage can be avoided by leaving enough time from the day the shortlisted potential buyers are addressed and the start of Due Diligence. Once the DD starts, however, it should not stretch out unnecessary, because speed of deal-making and ultimate deal success do correlate. 

Maintaining competition becomes difficult when not enough potential buyers emerge. Maintaining competition is also tricky when decision-makers decide to approach potentially interested buyers one at a time, e.g. to (attempt to) minimize rumors within the company or in the market. For larger corporations, the dynamics around divestitures are often unpleasant. 

The buyer will want to evaluate the business unit targeted for divestiture closely. Toward this end, the buyer may ask pointed questions during deal negotiations or a follow-up interview. 

The buyer may also request a tour of the business unit’s facilities, as well as additional data requests. A prepared seller will showcase the business unit’s offerings and potential value through these negotiations, interviews, facility tours, and background documentation.

A well-crafted response to the buyer’s offer, accompanied by substantial documentation about the business unit, will enhance the seller’s credibility and help the transaction close quickly. 

Much of the buyer’s focus will be on the market the divested business participates in, product plans, and sales strategies—all traditional areas that someone will use to value and evaluate a business. 

This will drive the content in the offering memorandum. A carve-out, however, will also bring an additional layer of questions about the business, including a specific focus on how the business will be separated. 



Deal manager and selected internal team members, external advisers




Meeting Agenda, Whiteboard, Strategy Documents


Spend one day or more to prepare materials for a two hour play.

Running the Play:


Request Potential Buyers to Submit Their Offers in Writing

Offers should reflect all of the information available to the potential buyer and should address, at a minimum, each of the following issues in the sections outlined below. 


The Offer should state the purchase price in [CURRENCY] and for what – e.g. for all of the non-cash assets of [Divested Entity], including accounts receivable, inventory, fixed assets, intellectual property and equity interests in subsidiaries. 

Details of the Acquirer

Offers should clearly state the identity of the acquiring entity, including its sponsors, owners (direct, indirect and beneficial), principals and any related entities. 


Offers should outline the purchaser’s obligation to consummate the transaction should not be contingent upon obtaining financing. NOTE: If an Offer includes financing, the potential buyer should include a statement of how they plan to finance the acquisition, including the specific amounts, expected terms and sources thereof. Where evidence of financing is necessary it should include: (i) the relevant forms of (or binding, executed) commitment letters and term sheets; (ii) any relevant additional information including financing structure and conditions, if any, to such financing and the status of these conditions; (iii) a specific table of sources and uses; and (iv) contact information for all sources of financing. 

Due Diligence

Due diligence investigations should be completed by the Offer date. Any Offer conditioned on further due diligence review should include a list of the due diligence items that still need to be completed and a timeframe for such completion. It is advisable that a statement setting out that the potential buyer has concluded their due diligence be obtained.  

Approvals and Consents

The Offer should be signed by a senior member of the potential buyer’s organization who is fully authorized to bind the organization to the terms of the Offer. The Offer should state whether it is contingent upon any additional business, legal or financial due diligence being conducted (if so, exact requirements should be specified). 

The Offer should indicate that all required corporate approvals have been obtained. The Offer should also set forth in detail any necessary governmental, regulatory or other approvals that will be required in order to close a transaction and the period of time required to secure such approvals, as well as any other contingencies. 


Offers should provide a detailed description of the potential buyer’s intended strategy with respect to the current and/or former management and employees of [the Organization] and how they have participated in or contributed to the development of the Offer. 

Other Closing Conditions

Offers should specify any other conditions (including any conditions to execution of the SPA). If the potential buyer’s willingness to execute a definitive Share Purchase Agreement or to consummate a transaction is subject to the fulfilment of any conditions or contingencies, the potential buyer should specify the details of such conditions or contingencies. Any uncertainties or delays associated with such conditions or contingencies could significantly disadvantage an Offer. 


Offers should also indicate the potential buyer’s best assessment as to the period of time necessary to execute a binding Share Purchase Agreement and to close a transaction. 


Offers should list out all outside advisors the potential buyer has engaged or will engage along with their contact information. 

Contact Information

Offers should include the names, addresses and telephone numbers of persons to be contacted to clarify or respond to any areas of uncertainty in Offers. 

Non-disclosure Agreement (NDA) 

The terms of the Non-Disclosure Agreement previously executed in the earlier stage of the divestment project should apply to the Offer and throughout the remainder of the bidding process. Nothing outlined in an Offer should adversely modify any confidentiality agreement. 


Request Letters of Intent to be Submitted (LOI)

Following the short-list and prior to the management presentation and site visit, each potential buyer is provided with LOI Instructions. Multiple letters of intent may be received by the seller. The seller will need to decide the best course of action based on a thorough review. Detailed / full due diligence typically only occurs after an LOI is signed. One or more parties may enter into due diligence depending on the structure of the sale process and what has been agreed via any LOIs submitted.


Invite selected Buyers to the Due Diligence Process

The letter of intent needs to be signed by the buyer and seller at the start of the due diligence process. The LoI sets out the common understanding of the parties as to the key terms of the deal or at least the steps and methods that shall lead to these terms. Unlike the NDA, the LoI is usually non-binding with respect to its key provisions and should confirm that seller and buyer have a common understanding about the main deal parameters before both parties invest more time and money in the due diligence process. 

Additionally, the psychological effect of such non-binding MoU should never be underestimated, as parties can feel committed to the agreed terms, although they know that such terms are legally not binding. The seller, if he/she already knows what is important, should try to address key conditions already in the MoU phase to clearly define its most important cornerstones for the deal right at the beginning of the sales.