What are bid instructions?
During an auction process, one or more investment banks will issue bid instructions to those who have shown an interest in bidding. These instructions make up the rule-book for the bidding process and lay out the procedures that must be followed and the requirements and expectations of the seller.
Where have you heard about bid instructions?
You may come across bid instructions in other contexts, for example, if you are submitting a tender for a construction project, or perhaps even a government contract, or if you are looking to bid on a house at auction.
What you need to know about bid instructions.
As the name suggests, bid instructions make clear to potential bidders what the process and procedure will be. They will contain the timetable for the auction, from the selection process for initial bids to due diligence, the format for presenting the bids to senior management and the procedure for closing the bidding.
They are likely also to detail the information that should be included in a letter of intent, for example the probable value of the investment, the percentage of equity on offer, any material or warranties required and what, if any, are the terms and conditions of the sale.