First round
M&A / Merger ModelThe opening stage of an auction, where bidders price the business off the CIM and submit non binding indications.
In the first round bidders receive the CIM and limited additional information, and are asked for a non binding indication of value, normally a range, together with their proposed structure, funding and timetable.
Its purpose is selection rather than price discovery. The seller uses it to decide who proceeds, weighing not just the number but deliverability: whether the bidder can actually fund it, how conditional the offer is, and how quickly it could complete.
Bidders are pricing on thin information, so ranges are wide and deliberately so. A first round number is an option to continue, not a commitment, and everyone in the process understands it that way.
Typically a handful of parties are shortlisted from a much larger initial list, and the seller balances keeping enough bidders for tension against the cost of running a wide second round.
Worked example
Eighteen parties receive the CIM. Eleven submit indications, ranging from 260 to 340.
The seller shortlists five, and not simply the top five numbers: a 330 bid from a sponsor without committed financing may rank below a 310 bid from a strategic with board approval already in hand.
The range is wide because bidders are pricing on the CIM alone. A first round number is an option to continue, not a commitment.