Series 79: 11.2.11. Identifying And Performing Due Diligence On Potential Buyers

11.2.11. Identifying and Performing Due Diligence on Potential Buyers

Before the first round of an auction starts, and in some cases even before the sale process has been determined, the seller and its investment bankers will conduct an extensive analysis of potential buyers. Sometimes the analysis will focus on one particular buyer in preparation for a negotiated sale to that buyer. This might occur because the prospective buyer approached the seller, or because the seller is contractually obligated to approach a particular buyer first and only approach others if that buyer refuses.

Identifying the appropriate pool of potential buyers is a vital step in the sale process. The sell-side adviser was likely chosen in part due to having experience working with the seller’s industry, and may have already developed a list of possible buyers. This initial list is often refined based on discussions with the seller’s mana