After the indicative offers in the first round have been assessed, the seller will subsequently remove an appreciable amount of bidders from the list of prospective buyers. The ability to access the data room, have authorised site visits and meetings with the management will be granted to the entities on the filtered list of potential purchasers.
During the second round of bidding, the bidders will furnish their final offers to the seller and if they have not already done so, provide the latter with their mark-up of the draft sale documentation. The seller will then deliberate the proposed terms of the interested parties. It is imperative to appreciate that the highest bidder will not always be the seller’s preferred choice. The terms of the sale documentation will generally be the determining factor.
Prior to the seller’s final decision pertaining to the preferred bidder, the former will endeavour to stimulate the competition between prospective buyers in order to acquire the most favourable offer or further ameliorate the draft terms. This tactical gambit could take a few days. Nevertheless, the seller will continue to pressurise the most attractive entity to make compromises regarding price, terms or timing even after they have been chosen as the former’s number one choice.