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From the buyside — I’ve seen, rather than marking up the auction draft SPA, sending the final bid and attaching a summary of the material issues/terms the buyer would like reflected based on their reading of the seller’s auction draft. If chosen, they’d enter into exclusivity and buyers counsel would proceed to mark up the auction draft at that point.
I agree with this. Often, in the seller's process letter, the seller will have a matrix of material issues that lay out the seller's preference (or position in an auction SPA that is already drafted) and the buyer is required to respond to those issues (accept, modify as follows, etc) and add any others. The issues include everything from purchase price structure, escrows, expected reps, RWI structure and how costs will be handled, etc.
Talking about alternatives in a phase II process letter