3. Competitive bid versus a negotiated deal. Should the company simply offer a block of its securities for sale to the highest bidder, or should it negotiate a deal with an investment bank? These two procedures are called competitive bids and negotiated deals, respectively. Only about 100 of the largest firms listed on the NYSE, whose securities are already well known to the investment banking community, are in a position to use the competitive bidding process. The investment banks must do a great deal of investigative work (“due diligence”) to bid on an issue unless they are already quite familiar with the firm, and such costs would be too high to make it worthwhile unless the bank was sure of getting the deal. Therefore, except for the largest firms, offerings of stock and bonds are generally on a negotiated basis.