In the context of M&A transactions, a sale process in which a seller solicits competing bids for a target company or business. In an auction, the seller controls the sale process and drafts the transaction documents. Auctions allow sellers to maximize the purchase price and negotiate more favorable deal terms. Sellers also have more control over the due diligence process, including the number and scope of the documents disclosed and the amount of time bidders have to investigate the target company or business.
In bankruptcy, a public auction of the debtor’s assets is governed by court approved bidding procedures that set the terms conditions, and timeline of the auction. The bankruptcy auction is generally run by the debtor or the US Trustee. At auction, pre-approved bidders compete to submit the highest or best bid for the sale assets. The winning bidder at auction must be approved by the Bankruptcy Court.
For more information on auctions and the auction process, see:
For an example of an auction form stock purchase agreement, see Standard Document, Stock Purchase Agreement (Auction Form) ( www.practicallaw.com/3-502-5305) .