The One-Contact Open Auction
Run your own bidding war: no brokers, one point of contact, and the hardest deal wins.
- Difficulty
- Advanced
- Time to result
- ~weeks to results
- Steps
- 3
- Confidence
- 90%
When you hold an asset two rivals both want, run the competitive process yourself: be the single point of contact (no brokers, no intermediaries), keep it fully transparent ('I'll tell you everything I tell them'), and set one clear rule — whoever signs a no-outs, hard deal for the highest amount wins. Then actively bring the second bidder to the table so the two escalate each other.
Origin
When Walmart came to New York to buy the Zellers leases, Baker set his terms — one point of contact (him), an open process, and 'whoever comes in and signs a no-outs deal, hard deal, for the highest dollar amount, gets it.' Then he immediately phoned Target, who wasn't even in the running, to create the auction.
Core principles
- 01Be the single point of contact — no brokers, no intermediaries diluting information or urgency.
- 02Run it openly and honestly: tell each bidder you'll tell them exactly what you tell the other; fairness sustains the tension.
- 03Define the winning condition up front: the highest hard, no-outs (no-contingency) offer wins.
- 04Manufacture the competition — proactively bring the second bidder in rather than waiting for one to appear.
How to run it
- 1
Set the rules of the process
Declare yourself the sole point of contact, ban brokers and intermediaries, and state the winning condition: the highest no-outs, hard deal takes it.
Pro tip A 'no-outs, hard deal' removes contingency risk and forces bidders to be serious.
- 2
Recruit the second bidder
Immediately approach the rival who isn't yet involved and frame urgency ('this is your last chance'). Two bidders make the auction.
Pro tip Baker hung up from Walmart and called Target directly: 'If you ever want to come to Canada, this is your last chance.'
Watch out Price the asset on your reframed thesis first (Baker priced Zellers on lease-spread × cap rate = $2.2B), so both bidders anchor high.
- 3
Let them escalate, hold your integrity
Run the open process and let bids ratchet ($500M → $1B → $1.2B → $1.85B). Once you shake hands, honor it even when the loser comes back with more.
Pro tip Baker turned down Walmart's extra $100M after shaking hands with Target — the reputation is worth more than the increment.
Watch out Breaking a handshake for a higher late bid can win one deal and cost you every future one.
In the wild
Baker set a one-contact open process for the Zellers lease portfolio, then called Target to join Walmart. Bids climbed from Target's opening $500M through $1B and $1.2B to a final $1.85B Target deal. When Walmart called after the handshake offering $100M more, Baker declined and honored the Target deal.
→ A ~$1.85B profit on a company bought two years earlier for $1.2B — and Target, having overpaid and mismanaged the conversion, bankrupted Target Canada while Baker kept his reputation intact.
Common mistakes
Letting brokers and intermediaries run the process
They dilute information, slow urgency and take the relationship out of your hands. Baker insists on being the only point of contact.
Waiting for competition to appear
Baker created the auction by cold-calling the bidder who wasn't involved. No second bidder, no bidding war.
Breaking your handshake for a higher late bid
Walmart's extra $100M wasn't worth Baker's word; honoring the Target deal protected a reputation worth far more over a career.
Is it for you?
Best for
Owners selling a scarce, strategic asset that two or more large players want, who can credibly run a disciplined process themselves.
Not ideal for
Commodity sales with many interchangeable buyers, or sellers who lack the relationships/standing to convene the top bidders directly.
From the transcript
“There's going to be one point of contact, me. No brokers, no intermediaries. And whoever comes in and signs a no-outs deal, hard deal, for…”
“So they leave, and what do I do next? I pick up the phone and I call Target, because I wasn't working with Target.”
“I was able to have character and integrity for 100 million dollars... I shook hands with the nice people from Minnesota.”
From the episode
Episode 569: Richard Baker: Entrepreneurship Lessons From Billion Dollar Deals and Bold Risks
Richard Baker