Limited Auctions and Maximizing Company Value

By Generational Equity


“Business owners that do not use professional guidance during an M&A event are at a serious disadvantage.” Why Should I Hire an M&A Advisor to Find a Buyer?

A time-honored truth for the M&A industry is the importance of securing the advice and guidance of experienced professionals in this field. Many business owners do not initially understand how much goes into this process. That is why we host complimentary executive conferences across the country, which offer a helpful overview. Indeed, numerous owners we’ve met in the past who sold their companies without professional guidance have said how they wished they had the kind of support Generational Equity provides when selling a company.

The reason for this is simple: the knowledge that you are working with an advisory firm convinces buyers they may need to pay a premium for your business.

An M&A consultancy firm for business owners looking to sell is like the navigator on a ship. They help you reach your destination as quickly and smoothly as possible, all with the aim of discovering your ‘treasure’: the optimal value for your company.

On your journey, your professional team will help you navigate every stage, including the subject of this piece: a limited auction. A limited auction (also known as a targeted or controlled auction) plays a pivotal role in maximizing the value of your business among buyers, and helps to identify the ideal buyer for your company going forward.

So, what is a limited auction? As Divestopedia notes:

“A [limited] auction is a process which focuses on a limited amount of bidders for an acquisition of a company… A targeted auction weeds out buyers that are not a fit quickly compared to a broad auction which approaches all potential buyers in the market regardless of fit.”

Therefore, once your company is ready for sale (the end goal of our process to build a ‘buyer-ready’ business), our dealmakers at Generational Equity will setup a limited auction, creating a competitive bidding environment that will invariably increase your company value. Generating this atmosphere in front of carefully-selected strategic and/or financial buyers will instantly make your business more sought-after.

The Best of Both Worlds

A limited auction is not the only sales process available to those selling their business: there are also broad auctions (which have a large volume of bidders) and targeted solicitation (approaching a smaller group of buyers). While all three have advantages and disadvantages, there is a reason why limited auctions are the preferred approach in middle-market M&A. That is because it provides the best overall solution to the following concerns:

  • Time it takes to complete a deal
  • Confidentiality
  • Maximizing business value

For instance, a broad auction places your business in front of more prospective buyers. But, this is more likely to compromise the confidentiality of your company’s status. On the other hand, targeted solicitation is significantly more confidential, but no competition means you are unlikely to secure the optimal price for your business.

A limited auction offers the best of both worlds, and is the ideal approach to securing the right deal for your business. Your business is presented to a reasonably small but highly interested group of buyers, you minimize the risk of confidentiality, and improve your odds of identifying the right buyer in the shortest time.

This is especially true if you are working with skilled professionals, like our team at Generational Equity.


Because setting up a successful limited auction relies on two important details:

  1. A full understanding of the seller’s goals.
  2. The ability to maintain complete control of the process.

Our approach covers both considerations. Our comprehensive valuation process and regular communication with clients ensures that we know what they are looking for, which determines the buyers we include in the auction. In addition, thanks to our extensive database of over 34,000 business buyers, we have the resources to identify what buyers will be the best fit for your company.

We maintain a strong relationship with buyers through DealForce, our proprietary, effective middle-market portfolio of businesses across a broad range of industries. And, thanks to our reputation in this market, when buyers learn you are working with us, they are inclined to increase their bids compared to what they would offer if you were approaching this alone. Even the illusion of a limited auction can be a powerful tool in securing the best deal for your company.

If you’d like to discover more about limited auctions and other elements of our dedicated M&A process, attend one of our executive conferences. Here, we discuss how to develop a successful exit strategy, from an initial valuation and enhancement techniques, all the way to deal closure. In addition, you can discuss your goals with our experienced professionals, who are keen to learn more about your business and where you see yourself in five years, ten years and beyond.

For more information on our process or to find an executive conference near you, contact us today on 972-232-1121.