Business, Legal & Accounting Glossary
Competitive tension is the pressure felt by possible acquirers of a target firm when they are aware that one or more other parties are vying for the same target at the same time. In such a situation, each potential acquirer feels driven to offer the highest possible purchase price and/or most appealing deal terms; otherwise, one of the competitor purchasers may acquire the target company.
Competitive tension is a highly advantageous condition for the seller since it produces an environment that often results in higher deal valuations and enhanced transaction conditions, while decreasing transaction risk. Target firms, or their agents, will generally seek to maximise competitive tension, subject to other considerations such as confidentiality, through a well-managed and well-executed sale process that includes numerous competing acquirers, such as an auction.
Prospective Buyer List
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This glossary post was last updated: 26th January, 2022 | 0 Views.