What Is a Counterbid?
A counterbid is a response to an offer or bid that is further favorable for one party than a prior to now submitted bid. A bid is an offer from a purchaser to buy an asset from a seller. All over the negotiation process, it’s not extraordinary for each side to issue a few counterbids. Each and every purchaser and seller would in all probability issue counterbids to each other throughout the manner of attaining a value they may be able to agree upon.
Key Takeaways:
- A counterbid is a response to an initial offer or bid.
- Each purchaser or seller may make counterbids, revising their offers until all sides can agree upon a value.
- Counterbids may additionally come from a third party no longer involved throughout the distinctive offer.
Working out a Counterbid
The period of time “counterbid” is continuously used when discussing the acquisition of a trade. Counterbids may additionally come from a third party no longer involved throughout the distinctive offer. For example, think Company A submits a bid to shop for Company B. Then Company C submits a counterbid to Company B offering further favorable words. Company B can come to a decision to submit a counterbid to each party, or accept some of the a very powerful offers.
All over a sale, the patron makes an initial bid to buy an asset. If the seller does now not identical to the initial bid, they may be able to offer a counterbid, indicating a value or words they are ready to only settle for. The consumer can accept the seller’s counterbid, or submit their own counterbid at words which will also be further favorable than the initial bid, on the other hand a lot much less favorable than the seller’s counterbid. Negotiations would in all probability pass backward and forward in this method until a final value is agreed upon.
Counterbids aren’t extraordinary in property product sales. Precise assets agents attempt to obtain the best value for their shoppers and typically have a threshold at which they’re going to no longer negotiate further. Each party would in all probability continue to counterbid until they reach that threshold, at which stage the deal is each sealed or abandoned.
Examples of a Counterbid
In July 2014, cut price retailer Dollar Tree (DLTR) introduced to buy rival Family Dollar Shops. On the other hand, Dollar Standard (DG) made its non-public offer to Family Dollar shareholders in August 2014. Dollar Standard’s offer for Family Dollar was once a counterbid to Dollar Tree’s distinctive offer.
Here is each different example. Aaron is selling his area. Susan makes a bid for Aaron’s area that is $10,000 lower than the asking value. Aaron can go back to Susan with a counterbid that is $5,000 lower than his distinctive asking value. The words of Aaron’s counterbid are further favorable to him than Susan’s first counterbid. Susan can make a choice to only settle for the counterbid or submit each different counterbid to Aaron.
