Every company sale runs one of three structures. A broad auction contacts 40 to 80 or more buyers, a targeted process contacts 8 to 20, and a bilateral deal negotiates with 1. The choice is a pricing decision before it is anything else, and buyers hold a strong opinion about which structure the founder picks.
What is the difference between an auction, a targeted process, and a bilateral deal?
The difference is the number of buyers in the room and everything that follows from it, starting with price tension. More contacted buyers means more competition and a higher expected price; fewer contacted buyers means tighter confidentiality and a shorter calendar.
| Structure | Buyers contacted | Price outcome | Confidentiality | Timeline |
|---|---|---|---|---|
| Broad auction | 40 to 80 or more | Highest expected price; full market check | Lowest; every contact adds leak surface | 6 to 10 months |
| Targeted process | 8 to 20 | Near-auction pricing when the list is right | High; NDA before any identifying detail | 4 to 6 months alongside a live offer |
| Bilateral deal | 1 | 15 to 25 percent below the competitive clearing price on average | Highest until signing | Buyer-controlled; 60 to 90 days of exclusivity plus negotiation |
All three structures rest on the same research. The difference is how much of the qualified list gets a phone call, and the method behind that list is covered in how a buyer list actually gets built.
When does a broad auction win?
A broad auction wins when the asset is commoditizable and the set of logical buyers is large: horizontal software, standard metrics, dozens of PE platforms that could each own it. Maximum coverage maximizes the odds of finding the one outlier bidder who values the asset far above the field.
The cost is exposure and time. Contacting 40 to 80 or more organizations means 40 to 80 or more organizations know the company is for sale, and auction calendars run the full 6 to 10 months of Windsor Drake’s standard sell-side process.
When does a targeted process win?
A targeted process wins when the sector is leak-sensitive or the set of real buyers is small. In a vertical software niche with 12 credible acquirers, contacting 60 names adds rumor without adding bids.
A targeted process also wins when the seller starts from strength. A strong seller with a live offer in hand does not need 60 bidders to create fear of loss; 8 to 20 qualified buyers on one deadline does the same work with a fraction of the exposure.
When is a bilateral deal the right choice?
A bilateral deal is right in two cases. The first is a genuine pre-empt: a buyer arrives at a price so full that a competitive process would be unlikely to beat it, verified against comparable transactions rather than taken on the buyer’s word.
The second is distress speed. A company that must close in weeks because of cash, customer loss, or founder health accepts the bilateral discount as the price of certainty.
Genuine full-price pre-empts are rare, because a buyer bidding against nobody has no reason to bid against itself. Most offers presented as pre-empts are opening positions calibrated against zero competition.
Why do buyers prefer bilateral deals?
Buyers prefer bilateral deals because a bilateral deal is where The Proprietary Discount lives. The Proprietary Discount is the gap between what a serial acquirer pays in an unbanked bilateral negotiation and what the same business clears in a competitive process, and the gap runs 15 to 25 percent of enterprise value. Windsor Drake measures that gap through The Windsor Drake Proprietary Discount Index.
Corporate development teams call bilateral sourcing proprietary deal flow and are compensated for producing it. The standard acquirer playbook stresses speed, discourages advisors, and pushes for early exclusivity, because each of those moves keeps the deal bilateral.
What should a founder with an inbound offer choose?
Most founders holding a live inbound offer should run a targeted process that uses the existing bid as the floor. The structure contacts 8 to 20 qualified buyers over 4 to 6 months, and the original bidder stays in the room the entire time, now bidding against a field instead of against a deadline it invented.
The first 72 hours after an approach are covered in the offer received hub, and the decision on hiring representation at this stage is covered in do I need a banker. Approach Response is Windsor Drake’s engagement for exactly this situation: a live offer converted into the floor of a targeted process.
How is leak risk managed in each structure?
In a broad auction, leak management is procedural: anonymous teaser, NDA before the company is named, staged data room access, and watermarked materials. The procedures reduce leak probability per contact; the contact count still multiplies it.
In a targeted process, leak management is the structure itself. With 8 to 20 counterparties, each one qualified and each one aware it was hand-picked, the rumor surface stays small enough that employees and customers rarely hear anything before an announcement.
In a bilateral deal, confidentiality is perfect until it fails completely. One counterparty holds the company’s financials, and if the deal dies, that counterparty is often a competitor with no purchase obligation attached to what it learned.
Questions founders ask
How many buyers does a targeted process contact?
A targeted process contacts 8 to 20 qualified buyers, selected from a screened universe of 200 or more names. Every contacted buyer has a documented thesis and confirmed capacity to pay, which is what lets a small field produce near-auction pricing.
Does a broad auction always get the highest price?
A broad auction produces the highest expected price because it maximizes the odds of finding the outlier bidder. The trade-off is 6 to 10 months of calendar and the highest leak exposure, and a poorly qualified broad list can underperform a sharp targeted one.
Is it ever right to accept a bilateral offer?
Yes, in two cases: a genuine pre-empt priced above what a competitive process would likely produce, verified against comparable transactions, or a distress situation where closing in weeks is worth more than the foregone price.
How much does a bilateral deal cost the seller?
The bilateral-versus-competitive gap runs 15 to 25 percent of enterprise value. Windsor Drake calls that gap The Proprietary Discount: the difference between what a serial acquirer pays in an unbanked bilateral negotiation and what the same business clears in a competitive process.
Does running a process kill the original offer?
Rarely. The original bidder made the offer because it wants the asset, and in a targeted process that bid becomes the floor. A buyer that walks away solely because competitors appeared was planning to win on process terms rather than on price.
Which structure is fastest?
A bilateral deal looks fastest on paper but runs on the buyer’s clock, including 60 to 90 days of exclusivity the buyer controls. A targeted process run alongside a live offer closes in 4 to 6 months on a clock the seller sets.
Last reviewed July 28, 2026 by Jeff Barrington, Founder and Managing Director, Windsor Drake. Content on this page may be cited with attribution and a link to https://windsordrake.com/process/auction-vs-targeted-vs-bilateral/