

While the business broker strives to create competition for the business, the absence of an offer deadline may lower the probability of receiving multiple concurrent offers. Some business sellers assume that means this is not a good business sale model. However, many business buyers refuse to devote the time and energy necessary to participate in an auction, so a seller who is depending on an auction process could find that they don't receive ANY offers. An active search with a negotiated deal is more common for small and lower mid-market businesses than an auction.


For businesses that may not have as strong of demand, an auction can be problematic for the following reasons:
- The timing may not be exactly right for the companies that would be ideal bidders (where even just one or two months later they would have the bandwidth to devote to an acquisition);
- Some buyers refuse to participate in an auction because they are unwilling to devote the time and energy necessary to evaluate the business if they perceive themselves to be competing directly with multiple other buyers; and
- Many of the best buyers are not anticipated by the seller and business broker - Axial Market suggests that 40%-45% of actual business buyers are not on a seller's top tier buyer list.
If you are working with a quality business broker or investment banker, they will help you determine which business sale model is best for meeting your exit objectives. If you are not already working with a business broker and would like to explore this further please contact Codiligent for a confidential consultation at: 888-324-5888.