What Is a Counterbid?
A counterbid is a response to an offer or bid that is more positive for one party than a formerly submitted bid. A bid is an offer from a purchaser to buy an asset from a seller. During the negotiation process, it isn't uncommon for each side to issue numerous counterbids. Both purchaser and seller might issue counterbids to one another during the time spent arriving at a price they can concur upon.
Figuring out a Counterbid
The term "counterbid" is in many cases utilized while examining the acquisition of a business. Counterbids may likewise come from an outsider not engaged with the original offer. For instance, assume Company A submits a bid to purchase Company B. Then, at that point, Company C submits a counterbid to Company B offering better terms. Company B can choose to present a counterbid to one or the other party, or acknowledge one of the offers.
During a sale, the purchaser makes an initial bid to buy an asset. On the off chance that the seller could do without the initial bid, they can offer a counterbid, showing a price or terms they will acknowledge. The purchaser can acknowledge the seller's counterbid, or present their own counterbid at terms that are more great than the initial bid, however less ideal than the seller's counterbid. Negotiations might go this way and that as such until a last price is agreed upon.
Counterbids are common in property sales. Real estate agents endeavor to get the best price for their clients and normally have a threshold at which they won't haggle further. Each party might proceed to counterbid until they arrive at that threshold, at which point the deal is either fixed or abandoned.
Instances of a Counterbid
In July 2014, discount retailer Dollar Tree (DLTR) offered to buy rival Family Dollar Stores. Be that as it may, Dollar General (DG) made its own offer to Family Dollar shareholders in August 2014. Dollar General's offer for Family Dollar was a counterbid to Dollar Tree's original offer.
Here is another model. Aaron is selling his home. Susan makes a bid for Aaron's home that is $10,000 not exactly the asking price. Aaron can return to Susan with a counterbid that is $5,000 not as much as his original asking price. The terms of Aaron's counterbid are more great for him than Susan's first counterbid. Susan can decide to acknowledge the counterbid or present another counterbid to Aaron.
- A counterbid is a response to an initial offer or bid.
- Either purchaser or seller can make counterbids, overhauling their offers until the two sides can concur upon a price.
- Counterbids may likewise come from an outsider not engaged with the original offer.