What is the main goal of conducting a broad auction in the sell-side process?

The main goal of conducting a broad auction in the sell-side process is to maximize competition and achieve a higher price. By opening the sale to a wide array of potential buyers, the seller can create an environment where multiple bidders are competing against each other. This competition often drives up the purchase price, as buyers may be willing to offer more to outbid their competitors.

In contrast, focusing on fewer bidders can limit the competitive dynamics that typically lead to higher valuations. A broad auction not only encourages higher bids but can also elicit interest from diverse potential buyers, including strategic acquirers and private equity firms, each bringing different valuation perspectives and pricing strategies. Additionally, a competitive environment may lead to better terms overall, including potential contingencies or favorable deal structures for the seller, enhancing the overall outcome of the sale process.