A ‘Private Sale’ refers to the the targeted sale of a company or individual shares in a company to selected buyers. The sale takes place without a public tender and, in most cases, without a wide-ranging bidding process.
The main aim is to ensure a controlled and confidential transaction. Sellers can engage specifically with buyers who are a strategic, financial or cultural fit for the company.
Typical buyers at a private sale are:
- strategic investors
- other companies in the same or a related sector
- Financial investors
- existing shareholders
- Members of the management team
- selected private individuals or entrepreneurs
A private sale may involve the sale of the entire company or just a specific stake. This approach is often chosen when discretion is particularly important or when potential buyers are already known.
Typical objectives of a private sale are:
- Maintaining confidentiality during the sales process
- target suitable buyers
- reduce the effort involved in a public sales process
- disclose sensitive company information only to a limited extent
- facilitate strategic partnerships or succession planning
- tailor the negotiations to individual needs
The potential benefits of a private sale are:
- a high degree of control over the sales process
- less public attention
- targeted selection of potential buyers
- often faster coordination
- flexible structuring of the transaction
At the same time, there are potential drawbacks:
- less competition among buyers
- a potentially lower selling price
- greater dependence on individual negotiating partners
- limited scope for comparing offers
- Risk of cancellation if there are few interested parties
Unlike a structured sales process or an auction, in a private sale the business is not offered to a large number of potential buyers at the same time. This makes the process more discreet, but may also affect the sellers’ negotiating position.
innoWerft helps founders and companies to strategically assess potential growth, investment and exit options, identify suitable partners within its network, and prepare for discussions with potential investors or buyers.