Fixed price or auction

Fixed price or auction: which is better for the seller? Selling a business is one of the most important decisions for any owner. It requires a clear strategy and careful selection of the approach to reach the right buyers. One of the key questions is whether to announce a fixed price or organize a competitive bidding process. Practice shows that the second option—auction—often brings higher value and better terms for the seller.

There is no “ceiling” on the price

When a specific price is announced, it automatically becomes a benchmark for both the seller and the buyers. In many cases, this “ceiling” limits the potential for higher bids. Buyers tend to reduce or negotiate around the stated amount rather than bid higher. In an auction, the situation is completely different – the lack of a predetermined price stimulates competition, which can lead to bids significantly above expectations.

According to various analyses, competitive bidding can increase the final sale price by 15–30% compared to a fixed offer. The reason is simple: instead of looking for a “deal,” buyers are looking for a win.

Competition increases value

One of the greatest strengths of an auction is the sense of tension and urgency it creates. When potential buyers know they are not the only ones interested, they are willing to exceed their initial offers. It is this element of competition that often leads to 20% higher sales results.

This is especially true for businesses with unique assets or high market appeal, where demand is strong. In such an environment, buyers are motivated to act faster and bid more aggressively so as not to miss out on the opportunity.

Buyers invest more in understanding the business

The bidding process usually requires buyers to conduct a more in-depth analysis of the company. In their quest to win the deal, they pay attention to factors that are not immediately apparent—customer base, patents, strategic partnerships, growth potential.

This in-depth research often leads to the realization of additional value, which makes them willing to offer more. With a fixed price, the focus is mainly on the number in the ad, rather than the actual potential of the business.

Fixed price or auction? An auction is not just a formality—it is a tool for maximizing the price and terms of a deal. It is no coincidence that government institutions resort to auctions before moving on to direct negotiations—because competition leads to a fairer and often higher value.

TPA Bulgaria

+359 2 981 66 45/46/47

office@tpa-group.bg

128, G.S. Rakovski str, floor 2

1000 Sofia