How to Maximize Your Exit Valuation: Proprietary Offers or Full Market Auction?
When I sold my business, I ran a full market process. Eleven buyers entered the initial round; after nine months of diligence and negotiation, three remained. The winning buyer paid a strong valuation and aligned with our culture—but the process was grueling.
That experience taught me the tradeoffs between speed and certainty versus competition and price. Here’s what every founder should understand before choosing a path.
Real-World Valuation Snapshot
| Scenario | EBITDA | Multiple | Headline Price | Reality Check | Net Cash |
|---|---|---|---|---|---|
| Proprietary Add-On (Single PE Bid) | $5M | 8× | $40M | Faster close, smaller rollover | $33M |
| Auction (Multiple PE Bidders) | $5M | 9.5× | $47.5M | More work, higher fees, bigger upside | $35M |
| Strategic Buyer in Auction | $5M | 11× | $55M | Long diligence, earn-outs, complex terms | $39M |
Even a 1–2 turn difference in EBITDA multiple can swing your take-home by millions.
Case Studies
1. Proprietary Deal – HVAC Services Roll-Up
A $12M HVAC company sold to a PE-backed platform at 7.8× EBITDA with just 45 days of diligence. The founder chose speed and simplicity—$17M upfront, minimal disruption, no banker fees. He left potential upside on the table but gained peace of mind.
2. Full Auction – Premium Pet Food Brand
A fast-growth pet brand ran a full auction with 50 interested buyers and 11 IOIs. PE bids averaged 12×, but a strategic buyer paid 15×, pushing the sale to $150M. The six months of chaos were worth it—the spread added $30M to the outcome.
3. Controlled Auction – The Hybrid Model
Another founder ran a limited auction with eight vetted buyers. The process created just enough tension to raise bids to 9.2× EBITDA, versus an initial 8× proprietary offer—a balanced win between valuation and sanity.
CEO Realities
| Concern | Proprietary | Auction |
|---|---|---|
| Timeline | 2–3 months | 6–9 months |
| Workload | Low | High |
| Risk of leaks | Minimal | Elevated |
| Cultural fit | Easier to gauge | Often last-minute |
| Banker fees | None | 1–3% of transaction |
| Certainty of close | High | Variable |
Risks and Tradeoffs
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Information leaks: Auctions create buzz—sometimes too much.
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Retrades: Trusted buyers in proprietary deals may change terms last minute.
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Deal fatigue: Auctions are marathons; your team will feel it.
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Financing certainty: Proprietary buyers often come with committed funds.
Recent Market Examples
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Boojum (Fast-Casual Chain) → Sold to Azzurri for ~7.1× EBITDA, prioritizing speed.
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Phyn LLC (Smart Water Tech) → Acquired for ~3.8× revenue, synergy-driven.
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Omsom (Asian Sauces) → Sold for ~3.2× revenue, strong strategic fit over price.
Lesson: Timing, buyer fit, and process control matter as much as the multiple.
Smart Founder Tactics
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Quiet Benchmarking: Get informal valuations before signing anything.
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Phased Exclusivity: Test intent with a 30-day exclusive window.
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Controlled Mini-Auctions: Invite 5–10 prequalified buyers to bid privately.
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Term Sheet Precision: Watch earn-outs, rollovers, and working-capital clauses—headline numbers lie.
The Bottom Line
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Proprietary deals: Fast, clean, lower stress—but often lower valuation.
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Auctions: More work, more scrutiny—but usually higher payout.
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Hybrid models: The best middle ground for most $10M–$100M founders.
Your choice depends on your goals—maximum value, minimal disruption, or cultural fit for your legacy.
Final Thought
You can’t negotiate your way to an auction-level price without real competition. But you can engineer leverage with structure and timing.
At Apex CEO, we walk founders through this decision step-by-step—helping you evaluate buyers, set realistic timelines, and prepare your company for maximum value.
📩 luke@apexceo.co | DM “Exit” on LinkedIn to discuss your process strategy.
