Definition
An intermediated deal involves a party coordinating introductions, information, or negotiations for a transaction. In origination discussions the term commonly means a seller has appointed an adviser or business broker. The intermediary may run a broad auction, invite a narrow buyer group, or arrange a bilateral discussion.
Intermediation and competition are different dimensions. An adviser can manage a conversation with a single prospective buyer, while a business approached directly can speak with several buyers. The useful research questions concern who controls access, whom the intermediary represents, what information is available, and which process rules apply. An intermediary's presence alone does not establish price, quality, or transaction readiness.
In origination work
Record the adviser relationship and process stage alongside company research. A teaser may omit identity; a confidential information memorandum may become available later under agreed restrictions. Preserve the distinction between seller assertions and independently supported findings. When an adviser supplies a timetable, record its source and date rather than assuming every opportunity follows the same sequence. Direct outreach should respect any agreed communication channel.
How intermediated processes are organised
An intermediated sale usually begins with a mandate letter between the seller and an adviser or broker, followed by preparation of a short anonymous summary (a teaser), a longer confidential document, and a list of buyers to approach. The adviser then controls the flow of information: who receives the teaser, who signs a confidentiality agreement, who is invited to a management meeting, and when indications of interest are due. The seller's name is often withheld until a buyer has signed.
Processes vary in breadth. A broad auction approaches many buyers and sets a common deadline. A targeted process invites a small number. A negotiated process may involve a single counterparty with an adviser acting as go-between. Research on private equity sellers compares how these choices differ when the likely buyer is a financial sponsor rather than a strategic acquirer, which is a reminder that the intermediary's design choices are themselves a variable, not a constant.
What intermediation tells a researcher, and what it does not
The fact of intermediation tells you where to direct a conversation and which channel the seller has chosen. It also tells you that a teaser exists, that the seller has likely prepared financial information, and that a timetable is probably in force. It does not tell you the price expectation, the number of competing buyers, or whether the seller is committed to completing a sale. Advisers are engaged for many outcomes, including testing the market.
Do not infer representation from a name on a website. A broker who lists a business may be the seller's agent, may be marketing a different business of a similar name, or may no longer hold the mandate. Registration status is relevant too: United States law regulates persons who effect securities transactions, and the federal statute contains a specific exemption for certain M&A brokers handling the sale of privately held companies, so the regulatory position of an intermediary depends on facts a researcher should not guess.
Working with an intermediated record
Record the adviser's name, whom they represent, the date the mandate was first observed, and the source of that observation. If a buyer is contacted directly while an adviser is engaged, find out whether the adviser has asked to be the channel for all contact, and follow the instruction. Keep the teaser's claims attributed to the seller side and do not merge them with independently collected findings; a teaser is marketing material written to attract interest.
A useful discipline is to date every process stage: teaser received, confidentiality agreement signed, confidential document received, indication due, management meeting. A pipeline that carries these dates can show how long intermediated opportunities really take and where they stall, and it can distinguish a live process from a stale listing that nobody is running any more.
Related terms
- Sell-side adviser — A party engaged to assist a seller with preparing, presenting, or negotiating a transaction.
- Business broker — An intermediary helping connect parties and organise the sale or purchase of a business within an agreed engagement.
- Confidential information memorandum (CIM) — A seller-side presentation describing a business and a proposed transaction for prospective buyers.
Further reading
- Research around sale processes
- Intermediated versus proprietary sourcing compared
- Business broker networks as a method
- Brokers versus direct outreach
- Teaser
- Article: origination pipeline stages and metrics
- Article: the research handoff checklist
Sources and further reading
- How Are Firms Sold?, The Journal of Finance (2007). The canonical study of how takeover targets actually reach a buyer: full auctions, limited auctions and negotiations, hand-collected from SEC filings.
- One size does not fit all: Selling firms to private equity versus strategic acquirers, Journal of Corporate Finance (2012). Why the sale process a seller chooses differs when the likely buyer is a sponsor rather than a strategic.
- 15 U.S.C. 78o: Registration and regulation of brokers and dealers, Legal Information Institute, Cornell Law School. The statute, including the exemption for certain M&A brokers handling the sale of privately held companies.
- Guide to Broker-Dealer Registration, U.S. Securities and Exchange Commission. Why securities-transaction intermediaries must register, which frames how M&A advisers and business brokers are treated.
- International Business Brokers Association, IBBA. The trade association for business brokers, with its code of ethics and membership designations.
To apply these distinctions to your own acquisition criteria, discuss your research brief or inspect the demo platform.