An expression of interest (EOI) campaign for the sale of a business involves a number of potential buyers being invited to make an offer to acquire a business often by a set deadline date.
Often, the EOI must conform to set criteria which is dictated to potential acquirers of the business at the outset.
EOI campaigns often work well to achieve optimum sale outcomes when selling your business. In our experience, the 3 main benefits of EOI campaigns are summarised below.
EOI campaigns normally entail a transaction advisor directly approaching specific strategic buyers for your business and seeking their agreement to confidentiality terms, as well as gauging their initial interest prior to releasing the identity of your business and any of its operational information.
When compared to other business sales strategies like advertising, this approach ensures that only the parties who you are comfortable with approaching, who are qualified, vetted and who agree to confidentiality terms will receive information regarding your business and its sale. This leads to better confidentiality outcomes.
During many traditional business sale processes, it is difficult to demand specific terms from buyers when offering your business to the market. However, as part of an EOI campaign, doing so is quite common.
Let’s assume for example that you wished to sell the retail arm of your business and retain your wholesale division whilst continuing to supply products to the retail business – as part of an expression of interest process you could dictate that potential buyers submit their desired terms for an ongoing supply agreement with your wholesale business, thus enabling you to negotiate on both the price and terms of the sale, together with the terms of an ongoing supply agreement in the same transaction, therefore allowing you to assess the terms of each component of the deal concurrently. Such negotiations are typically more difficult to manage in other sale processes.
Too often when offering your business for sale through advertising, or by making ad-hoc approaches to various potential buyers, minimal competitive tension is generated. This occurs as each buyer is normally negotiated with separately, meaning as a seller it is difficult to gain an overall view of the market response save for through the benefit of hindsight.
In EOI campaigns however, it is often the case that acquirers will be requested to make an offer by a set deadline date, thus ensuring that you can negotiate will all buyers at the same time, and play buyers off against one another in order to generate an optimum sale outcome.
Groves & Partners are experts in negotiating the sale of companies and businesses for our clients. As brokers and advisors on the sale of businesses and companies, we are particularly experienced in conducting expression of interest campaigns to achieve optimum outcomes for the sale of our client’s businesses.
To find out more about how we can partner with you to achieve success in the sale of your business, contact us on 1300 892 717 (+61 2 7208 7970) or email info@groves.com.au.