Competitive process in M&A: why multiple offers change the valuation
Reading time
9 minutes
Date
Jul 1, 2026
Author
Murilo Oliveira — Partner, igc Partners
A competitive process in M&A is the structured conduct of negotiations with multiple buyers at the same time. The seller's advisor contacts, qualifies and advances with several interested parties in parallel — strategic and financial — creating real competition for the asset and forcing each buyer to put forward its best proposal.
The logic is simple: no buyer makes its maximum offer when it believes it is alone at the table. The perception of competition changes behavior. When a buyer knows there are other serious interested parties, it adjusts its assumptions, compresses the discounts it would try to extract and offers terms more favorable to the seller.
The opposite — a bilateral negotiation with a single buyer — may seem simpler and less draining. But that apparent simplicity has a cost: without competitive pressure, the buyer sets the pace, tests limits and tends to extract advantages that would not exist in a process with multiple parties.
Imagine you received a direct approach from a buyer interested in your company. It looks like a good opportunity — after all, they came to you. The problem lies precisely there: whoever approaches first is signaling interest and, at the same time, gaining information about your willingness to sell.
In a bilateral negotiation, the buyer controls the pace. It can let the process drag, ask for more data, suggest valuation adjustments during due diligence and negotiate each clause as if it were the only variable at play. With no other buyers at the table, you have no reference for what the market would really pay.
It is not that the buyer is ill-intentioned. It is that it is doing exactly what any rational buyer does: optimizing the process in its own favor. The asymmetry arises from the absence of competition — and it is the seller who pays the price.
Consider the following scenario: two strategic buyers reach the round of offers with similar valuation assumptions. Neither of them, alone, would reach its maximum offer. But when each knows the other is also advancing, the math changes. Losing the asset to a competitor carries a strategic cost that goes beyond the price paid — and that cost enters the calculation of the offer.
The same applies to financial buyers. A private equity fund has return models that define a theoretical maximum price. In a competitive process, it tends to work closer to that ceiling — because making room for a competitor to win the asset also has an opportunity cost.
The practical result is that the final price in a well-run competitive process tends to be materially higher than in a bilateral negotiation. The difference does not come from the negotiation itself — it comes from the structure of the process. Millimeters of alignment between competing buyers can make a difference of tens of millions in the final check.
A competitive process follows a structured sequence. Each stage has a specific function, and confidentiality runs through all of them.
Upfront preparation: Before approaching any buyer, the advisor organizes the business documents — investment thesis, teaser, information memorandum — maps the universe of potential buyers and defines the process strategy. The quality of this phase determines the final outcome more than any subsequent negotiation.
Confidential approach and qualification: Buyers are contacted in a controlled and sequential manner, with a confidentiality agreement (NDA) signed before any substantive information is shared. In this phase, the advisor qualifies who has the financial capacity and genuine interest — and filters out those who are only gathering information.
Distribution of the information memorandum and NBO: Qualified buyers receive the detailed material about the business and are invited to submit an NBO — non-binding offer, a proposal with no binding effect indicating price and structure. This is the first real gauge of what the market is willing to pay.
Selection and advance to due diligence: With the NBOs in hand, the advisor and the seller select the buyers that move forward. The selection is not only about price — payment structure, earn-out, post-deal conditions and the buyer's profile matter as much as the number. Generally one or two buyers advance to due diligence.
LOI and temporary exclusivity: After preliminary due diligence, the selected buyer signs an LOI — letter of intent, a more formal letter — which may include temporary exclusivity to negotiate the definitive agreements. The LOI formalizes the main terms before the final documents.
Negotiation of the definitive documents: With the LOI signed, the parties negotiate the purchase and sale agreements, representations and warranties, and the other transaction documents. The M&A advisor supports the seller in this phase — in coordination with the lawyers responsible for the legal side.
A well-run competitive process happens under strict confidentiality. Employees, clients, suppliers and competitors should not know the company is being sold. A leak harms the valuation, creates internal anxiety, affects business relationships and gives an advantage to the party negotiating on the other side.
Confidentiality also protects the seller's position within the process itself. If buyers learn who else is participating, they try to calibrate their offers against the competitor's floor — and not against the real value they see in the asset. The advisor manages the flow of information to preserve competitive tension until the right moment.
That is why the decision to run a structured process — rather than responding to direct approaches — begins long before any buyer enters the scene. The entrepreneur who agrees to negotiate bilaterally and informally, without preparation, often discovers too late how much they left on the table.
The universe of buyers in a competitive process includes two large groups: strategic and financial. Strategic buyers are companies in the same sector or in adjacent sectors that see operational synergies — market share, technological capabilities, access to regions or channels. Financial buyers include private equity funds, family offices and other investment vehicles seeking returns over a medium-term horizon.
The ideal composition depends on the company's profile and the founder's objectives. Sometimes, putting a strategic and a financial buyer competing in the same process produces the best outcome — because each has different motivations and can arrive at distinct prices for the same asset.
International buyers have grown in interest in Brazilian companies across various sectors. More than half of the transactions conducted by global M&A boutiques in Brazil involve foreign players. Having access to this universe — and knowing how to approach it correctly — is part of what defines the quality of a competitive process.
In most cases, yes. But the result depends on preparation and execution — not on the structure by itself. A poorly prepared competitive process, with low-quality material, poorly qualified buyers or compromised confidentiality, can produce worse results than a well-run bilateral negotiation.
The most underestimated variable is upfront preparation. The valuation the market will assign to your company depends largely on how it is presented — which metrics are highlighted, what the growth narrative is, how the EBITDA adjustments are documented. It is not the negotiation that saves a poorly prepared deal.
Who runs the process also matters. An advisor with broad access to relevant buyers, with sector specialization and with partners on the front line — not junior analysts — can extract the most from a competitive process. The owner-to-owner process, with a partner present from beginning to end, makes a practical difference in the outcome.
igc Partners holds the seller's exclusive mandate in every transaction it runs. It has never represented a buyer. This means that all the efforts of the process — material preparation, buyer mapping, offer management, negotiation — serve a single objective: to maximize the outcome for the party that is selling.
With direct access to more than 6,000 strategic and financial buyers in Brazil and abroad, igc Partners ensures that the competitive process is in fact competitive — not a process with two or three obvious names from Faria Lima (São Paulo's financial hub). More than 50% of the firm's transactions involve foreign players, which broadens the universe of offers and frequently raises the valuation.
All processes are led by the firm's 34 partners — from the first contact with the entrepreneur to closing. It is not a junior team managing the client. It is a partner on the front line, with sector specialization, present at every stage. igc is number 1 in sell-side M&A transactions in Latin America, with 98 deals in the last 48 months, according to Mergermarket (Dec/2025).
The owner-to-owner process begins before any buyer enters the scene. The upfront preparation — building the sale thesis, positioning the asset, identifying the right buyers — is where the valuation is formed. The negotiation only confirms what the preparation has already built.
It is the simultaneous conduct of negotiations with multiple potential buyers, creating real competition for the asset. The seller's advisor approaches, qualifies and advances with several interested parties in parallel — strategic and financial — forcing each one to put forward its best proposal so as not to lose the deal.
Because no buyer makes its maximum offer when it believes it is alone at the table. The perception of competition changes behavior: the buyer compresses the discounts it would try to extract, adjusts its assumptions and moves closer to the ceiling of what it is willing to pay. Without that tension, the buyer controls the pace and tends to extract advantages that would not exist in a process with multiple parties.
The process broadly follows this sequence: upfront preparation and building the material, a confidential approach with an NDA, distribution of the information memorandum and receipt of NBOs (non-binding offers), selection of the buyers that move forward, due diligence, signing of an LOI and, finally, negotiation of the definitive agreements. The selection at the NBO stage is not only about price — payment structure, earn-out and the buyer's profile matter as much as the number.
It matters a great deal. A leak harms the valuation, creates internal anxiety among employees, affects clients and suppliers and gives an advantage to the buyer negotiating on the other side. Confidentiality is also part of the strategy: when buyers do not know who else is in the process, each one tends to put forward a more aggressive proposal.
In most cases, yes — a competitive process tends to produce better results for the seller. But the result depends on the quality of the preparation and execution, not just on the structure. A poorly prepared process, with poorly qualified buyers or compromised confidentiality, can deliver an inferior result. The most critical variable is upfront preparation — not the negotiation itself.
