1 / 7

How to win a bid without bidding!

How to win a bid without bidding!. Jim Corum Paul Greenland Quentin Hicks Amanda Nelson. How to win a bid without bidding. FMCG Advertising agency is for sale. A bank has been appointed to handle sale. There are two bidders: ASAP – A media conglomerate An MBO team of FMCG’s Directors

sela
Download Presentation

How to win a bid without bidding!

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. How to win a bid without bidding! Jim Corum Paul Greenland Quentin Hicks Amanda Nelson

  2. How to win a bid without bidding • FMCG Advertising agency is for sale. A bank has been appointed to handle sale. There are two bidders: • ASAP – A media conglomerate • An MBO team of FMCG’s Directors • As the MBO team we are trying to decide whether to bid or not bid for the company

  3. Background assumptions • Asking price based on ‘net services’ is $100MM • Offers below asking price will be rejected • Expected future value of FMCG is 110MM • MBO team cannot bid above $100MM • ASAP is cash rich and experienced at acquisitions • If bids are tied, price will increase to $105MM • Current owners need to sell quickly (inside information) • If no bids received owners are likely to seek deal with MBO team at reduced price

  4. To bid or not to bid? Payoffs of bidding/not bidding • ASAP’s best move is to always bid as they will always win given their ability to pay $5MM more • Our (weak) best move is not to bid

  5. However… • If we do not win the bid, we have decided to leave and set up our own company (at a set up cost of $10MM), taking with us many valuable employees and clients • Today, we tendered our resignations and are working through our two weeks notice period • When we leave, we calculate that FMCG will drop in value by $50MM • We have made all information public

  6. To bid or not to bid? Payoffs of bidding/not bidding • ASAP’s best move is not to bid • Our best move is not to bid and win!

  7. The winning bid • ASAP has completed many similar acquisitions • They looked ahead and recognized that future actions affect their current bidding strategy • In reality FMCG sold to the MBO team for only $60 MM

More Related