Should I avoid submitting a valuation range for a brokered process?

by a searcher from Ivey Business School at Western University

2 years ago

When submitting a bid for a brokered process - has anyone received a lot of push-back if they submitted a valuation range (e.g. $12-14M). This is for an IOI - we would be happy to pay at the higher end of the range once more information is shared and diligence checks-out

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44 comments

searcher from Babson College - F.W. Olin Graduate School

Not much to add to the views above. Ranges are good in more competitive situations as you can get past the initial broker IOI screen and learn more. You can always send a second IOI with a hard number later.In a proprietary or low competition setting, give a number, but qualify it as a multiple of earnings to explain adjustment in DD.

In general you’ll want to check in with your lender before sending an LOI, so I’d send an IOI with a firm number prior to doing the modeling needed to get to an LOI. You should be able to generate teasers for debt & equity with the same info needed for an LOI, and generate them before/just after getting an LOI signed.

2 years ago | like reply | 0 likes

intermediary

Please provide an explanation or simple formula you are using to come up with your offer in your IOI or proposal. It demonstrates that you understand the industry and offering and are willing to be transparent in your negotiations which will subsequently help you build trust with the seller (and the Broker).

2 years ago | like reply | 0 likes

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