Of course, you would never do that. Auctioning in the energy sector at times can be tricky – but it doesn’t have to be! With our new tool, we e-nable you to get the best of three worlds: Bilateral negotiated process, Limited Auction and Broad Auction!
In a project auction, project owners may use different marketing approaches, but the goals are the same: To achieve the highest possible value while having lowest possible effort and maintaining high transaction security, strict confidentiality and high reputation. Simply speaking they want to make the best possible deal without creating stranded costs or unnecessary rumors.
As one extreme, you could choose a bilateral negotiated process, meaning a one-to-one negotiation with already known- and preferred buyers. This may extract a premium price for exclusivity, ensures a maximum confidentiality and a minimal disruption of your own business and/or management. However, you may not leverage the full value given lack of competition. Furthermore, due to lack of competitive tension, it will be difficult to control the timetable and the speed of the bilateral process. By that, you will risk significant delays or even a total stranding of the process.
The other extreme, would be a broad auction. You offer your project to a wide range of market players to get the highest possible attention and competition and to get the highest possible bid. The broad tender ensures value maximization if no obvious buyers are known and if you want to explore the interest of “hidden” potential buyers (e.g. coming from other market segments or industries). It’s the same like to sell your car – you offer it to a friend, and get less than you want. You offer it on e-Bay and the “whole world” becomes a potential buyer. However, the broad auction comes also at a price: The workload and time effort for executing the broad auction is high and potentially disruptive to your business and management. Additionally, it is difficult or impossible to maintain confidentiality and the auction may create rumors about your project and/or your credibility.
This is why sell-side M&A advisors recommend you a limited auction, which is a compromise between a bilateral negotiated process and a broad auction. To get the deal done, the advisors offer the project to a limited range of strategic and financial players in form of a so called “structured process” including strict process phases and deadlines. Several potential buyers ensure competition, which maximizes value, a high speed to conclude your project, and a high degree of transaction security and confidentiality. The disadvantage: Your risk of delay and value erosion if the interest from potential buyers has been over-estimated. Secondly, M&A advisors offer structured sales process with a combination of running fees (retainer) and success fees (paid by the seller to the sell-side advisor in case of successful disposal- or financing of the project). Retainer fees can be in the range of 10,000 US$/month usually for a period of 4 to 6 months. Success fees can range between several hundred thousand to several million US$.
We developed our solution to help you out of such dilemma: With E-nable+, we combined the best of all three worlds. We formed a tool that will help you to finance your project while you will have time for other things – it is that easy! You don’t have to give up anything – uploading your project takes 5 minutes – and it’s for free! Offer your project in any project phases to a broad audience, stay confidential with our matchmaking system and only get in touch with those serious investors who are interested in your project. Save time, money and workload and simultaneously reach the highest possible project value and planning security and getting even more successful – we e-nable you to make it happen!
Günter Maier, 16. March 2016, 16:47