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Broad Auction

Definition

A sell-side M&A process in which the investment banker markets a company to a wide pool of potential buyers — often dozens — to maximize competitive tension and price. Contrasts with a fireside chat, where the banker pre-selects a small number of buyers they believe are the best fit.

Context

In Ep. 6, Dan Herr describes the broad auction as the dominant banker approach of a prior era — characterized as "spray and pray, send it out to everybody" — now giving way to narrower fireside chat formats as bankers niche down into specific verticals and cultivate direct relationships with target buyers. Dan frames the shift as driven by bankers' own conversion math: a specialist with direct lines to ten relevant buyers pitches a more compelling process to sellers than a generalist running a wide net.

Dan also treats the broad-vs-fireside split as a key diagnostic for banker coverage effectiveness: PE firms should segment their closed deals and LOIs submitted by "how many of those were broad auctions versus how many of those were fireside chats" to assess whether the firm is cultivating the right banker relationships. If a firm is consistently winning deals from bankers it didn't pre-cover, that's a signal its banker coverage strategy isn't working. (Ep. 6)

  • Fireside Chat — narrower alternative with pre-selected buyers
  • CIM — the marketing document used in auction processes
  • Teaser — the anonymous summary that precedes the CIM
  • Boutique Investment Bank — firms running these processes
  • Buy Side — the side PE firms participate on