Two or more people who really want to buy the same thing, shamelessly raising their offers. That's a bidding war.
This can happen in an auction setting. Imagine two people furiously waving their paddles in the air, trying to secure a rare painting or a discontinued bottle of wine. "Do I hear one million...a million...do I hear two million...five million...ten million!"
Bidding wars often break out in hot real estate markets as well.
In a corporate setting, a bidding war can break out for an acquisition. Two pharma giants get interested in a smaller drug developer who just figured out the next best cure for baldness. They keep upping their offer to shareholders, usually until one finally reaches the end of its financial rope.
A bidding war almost always ends with someone overpaying for the asset. It's marked by a break down in reason, with people getting more interested in "winning the bidding war" in the sense of eventually obtaining the asset than "winning the bidding war" in the sense of getting out of the situation in a better financial position than when they started.
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Finance: What's the difference between m...22 Views
Finance allah shmoop what's the difference between mergers and acquisitions
all right people listen up Merger that's what's about to
happen here it's a merger acquisition that's what's about to
happen here Corporate america is kind of same thing when
two companies merge while they generally you know attracted to
each other hopefully respect each other they share stock or
combined the stocks of each side and you know combine
efforts and then and then cuddle afterwards if they're successful
at the merger than the combination of two roughly equals
yields more than the one plus one combo that made
them so two companies get together on generally equal ish
footing In that case acquisitions are a combining more like
that eating thing on much different footing The large company
eats or buys the target either using its more highly
valued stock currency or it's taft to do so Well
why would a company acquire another Well the target might
have one hundred employees ninety of whom can be fired
with massive expense savings after the acquisition For the acquirer
such that economically the acquisition won't just makes a whole
lot of financial sense acquisitions happen for market power reasons
As well like imagine the negotiating leverage that amazon would
have if it bought the next five biggest online retailers
Or maybe it'll just kill them Probably not legal for
them to buy him anyway given the monopoly like dominance
of amazon these days But wow that would be a
powerful set of acquisitions And that would be a good
reason for ems on to acquire a whole bunch Things
and bezos would grow even more powerful maybe too powerful
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