Sellside vs Buyside Bake-off
Just started in my new role with little finance background. What is the difference between a sellside and buyside bake-off? Thanks!
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Sell-Side is you representing a potential seller of assets or otherwise claims to the company (i.e. divesting the company, selling equity stakes, raising debt) vs. buy-side is representing a potential buyer of assets (i.e. a company acquiring the assets of another company). A bake-off is a formal process where the company requests multiple banks to pitch their ideas and the company will pick the best idea and sign an engagement with the company.
I.e. in a sell-side bakeoff you may bring in 3-4 banks to pitch on strategy to divest a non-core portion of your business, valuation ranges, and target buyer list. The winning bank gets the mandate.
I.e.2 in a buy-side bakeoff, you ask 3-4 banks to bring you an idea to make an acquisition *or* you are in the VDR for a company marketing its assets and you bring in the banks to help with analysis to come up with a bid range as well as then helping with the due diligence.
Depending on who is your client buyside can be very very very strange. Some are financial sponsors, highly specialized in their industry and on transaction-oriented work, so the work that you do is mainly finding deals that fit within specified qualifications and returns. Others are less focused (strategics) on the acquisition so you're holding much much much more responsibility. Its important to take care of the differing demands of each client, as each will have different requests and desires.
Sellside mandates, just like buyside will be different depending on the client. Mandates focused on selling companies will leverage connections to find the optimal buyer for each situation. Sponsor exits will be looking to leave the company and not have any responsibility afterwards (optimally in most cases). Strategics divesting from a company, or selling a portion of it may want to retain an amount of decision making power, and also may want shadow equity, or warrants, or some type of royalties of IP created. Connecting these sellers is more complicated because most folk who buy houses do not want to get visits from the previous tenants.
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