A bilateral process is a transaction negotiated exclusively between two parties — typically one acquirer and the target company — without running a parallel /glossary/auction-process with multiple bidders.

How it works

A strategic customer expresses acquisition interest; the CEO and board enter bilateral talks under NDA. Terms evolve through LOI, exclusivity, diligence, and definitive agreement. Financing rounds can be bilateral too when one lead VC sets price and others follow without broad shop.

Speed and confidentiality favor bilaterals for small acquisitions, acqui-hires, and situations where only one credible buyer exists. Boards document why a bilateral path maximizes value — certainty, timing, employee treatment — especially if larger funds push for market-check outreach.

Exclusivity periods prevent the seller from soliciting others while the buyer diligences; /glossary/break-up-fee may apply if the seller terminates for a better offer. Financing rounds can be bilateral when a lead sets terms and syndicate follows without a broad shop — common when relationship and speed beat price discovery.

Why it matters

• Founders: Bilateral paths reduce distraction but weaken negotiating leverage. Hire counsel to avoid signing exclusivity too early on weak terms.
• Investors: Preferred shareholders may demand a brief competitive check before approving sale price in bilateral strategics.
• Operators: Keep operations stable; bilateral leaks still happen through customer and vendor channels.

Common mistake

Entering exclusivity with the first inbound bidder without validating price. Even one phone call to a second strategic can improve terms or provide board cover.

Related ideas

/glossary/auction-process, exclusivity, LOI, and fiduciary duty.