BUS 082 Lecture Notes - Lecture 20: Information Leakage, Investment Banking, Critical Role

• School: College of The Sequoias
• Department: Business (BUS)
• Course: BUS 082
• Professor: Porterfield

Document Summary

An auction is a staged process whereby a target is marketed to multiple prospective buyers ( buyers or bidders ) Provides a level of comfort that the market has been tested as well as a strong indicator of inherent value. Drawbacks: information leakage into the market from bidders, negative impact on employee morale, possible collusion among bidders, reduced negotiating leverage once a winner is chosen (thereby encouraging re- trading, taint in the event of a failed auction. Successful auction requires significant dedicated resources, experience, and expertise. In the later stages of an auction, a senior member of the sell-side advisory team typically negotiates directly with prospective buyers. Traditional auction is structured as a two-round bidding process that generally spans from three to six months (or longer) from the decision to sell until the signing of a definitive purchase/sale agreement ( definitive agreement ) with the winning bidder.