When selling your business, there's a spectrum of buyers you can approach. Joseph Carson, Fifth Third Securities managing director, buckets those buyers into three types of transactions that range from targeted to broad.

Targeted means going out to one or two parties in a process. It's limited in scope usually due to confidentiality or because there are only a couple buyers that fit for a particular business. A limited process might expand the universe of potential buyers approached from 10 to 50, which gives the seller a broader range of groups to talk to and provides broader perspective.

A broad sale opens the market to a very large number of buyers — 100 and up. This gives the seller a much broader base of parties to talk to and increases their options and is best suited for a business that has broader appeal, both from a strategic buyer or from a financial sponsor. It also maximizes the competitiveness in the process and provides a broad view of what the market is seeing in terms of valuation, terms and conditions and in other aspects of the business, so that the seller feels like they got the best market deal that they possibly could get.

Carson says he's found that sometimes the buyer that sellers think will be the best starting off in a process is not who's is ultimately the best buyer.

"And when you go very narrow you might lose the ability to find somebody other than that best buyer out there that that you can execute with," he says.

And that was the case when John Ballun, Val-Matic Valve & Manufacturing Corp. retired president and CEO underwent a sale process.

"We actually evolved through all three strategies in the process," Ballun says.

The company's sale began when it was pursued vigorously in February of 2020 by a European buyer who essentially forced the board to make a decision. Its fiduciary board chose to interview investment bankers, and then talked with its bank about the different strategies the company could go through in a sale process.

"We evolved from this one buyer to multiple buyers or strategic buyers, which we had our own list of strategic buyers," Ballun says. "But in our industry, there's a lot of private equity ownership. So we said, let's pursue that as well."

Being an ESOP, the company had the duty to the shareholders to do a fair sale process. And they determined that a fair sale process would be a broad one.

"We ended up going broad at the end and reached out to the 30 strategic buyers that we had known and selected — private equity, family ownership, even some public companies. We went very broad and we're very happy we did because the buyer that was successful, A.Y. McDonald, turns out was not even one of our 30 strategic buyers," Ballun says. "So, if we didn't go broad on our transaction, we would have had a different outcome for sure."

Carson and Ballun, along with Oswald's Jeff Schwab and Provariant Equity Partners' Murad Beg, spoke at the Cleveland Smart Business Dealmakers Conference, explored the pros and cons of different types of sell-side transactions. Hit play on the video above to catch the full panel discussion.