Selling a company in Japan or cross-border by auction
Auctions are the preferred way to sell, where different potential buyers may see different values
When owners decide to sell a company, different potential buyers may see very different values, and maybe prepared to offer quite different amounts and conditions.
An auction process allows the seller to explore the values different potential buyers see in the company, and to select the best possible conditions, which may include cash paid, and may include other factors.
Auctions are increasingly used to achieve the best conditions for the sale of a company.
Auctions have different dynamics than a straight sale by one-on-one negotiation. Negotiations will typically search for common ground between seller and buyer. There may be offers and counteroffers, and discussions about other factors influencing the total agreement.
In the case of an auction, the parties interested in acquisition will be influenced by the competition between the parties taking part in the auction.
There are several factors contributing to the success of an auction:
- Selection of a fair and suitable auction process. There are many different ways of conducting an auction.
- Fair and objective execution
- Proper use of time as a factor
- Confidentiality in a quiet auction. While some auctions, e.g. on the Tokyo Fish Market are public, most auctions to sell a company are held in secret, as a quiet auction. In a quiet auction, some selected information is revealed to bidders at different points in time, but not all information. Clearly trust is essential for a fair process.
Typical steps to sell a company by quiet auction
There are many different ways to structure an auction, and detailed steps will need to selected for each particular auction. As an example, most auctions will require a pre-qualification, so only qualified, or in some cases invited bidders will take part in the rounds of the auction.
- Establish a field of interested bidders. Bidder may be “invitation-only”, and bidders may be pre-qualified.
- Sales memorandum sent to qualified first round bidders.
- First round of bidding.
- Due diligence by bidders selected in the first round.
- Second round of bidding.
- Negotiation with those successful in the second round, leading to the sale.
This outline is only an indication, a suitable variation of this bidding process will be selected according to the particulars of a sale.
Here are examples of our projects:
- Assisted a French pharmaceutical company to acquire a pharmaceutical factory in Japan, including regulatory and environmental due diligence, and assistance with negotiations
- Advised NTT-Communications international M&A team on strategy and opportunities for 17 different industry sectors in Europe. Identified and analyzed potential targets for acquisition or investments, assisted with preparations for partnership negotiations.
- Performed technology and general due diligence on a Japanese energy efficient fuel company
- For an US industrial company, we analyzed the ASIC chip design market in Japan and searched for suitable cooperation, investment and acquisition partners
- Work with a European industrial group on acquiring part of a large Japanese industrial group.
The M&A process
- M&A process
- Understand the industry: research
- Find and approach partners
- Build cooperation
- Due diligence
- Negotiate and close agreements
- Post merger
- Sale of a company by auction in Japan, or cross-border
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