Bid Wanted

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DEFINITION of 'Bid Wanted'

An announcement by an investor who holds a security that he or she is looking to sell, telling interested parties that they can send in bids. A bid-wanted announcement does not represent an agreement to sell, but can lead to prices being negotiated.

INVESTOPEDIA EXPLAINS 'Bid Wanted'

Bid-wanted announcements are most likely used when investors do not want to solicit bids for securities directly and instead obtain bids through a broker. Brokers are tasked with identifying other parties that may be interested in bidding on the security and may only send the bid-wanted announcement to a set of investors rather than to the entire market. Using a bid-wanted announcement to obtain bids may not help the seller obtain the highest price for a security, but is likely to provide a much higher level of privacy. This may be important to sellers who do not want to communicate that they are shifting their financial positions.

A bid-wanted announcement lists the time when bids are welcome and the time when the winning bid must be honored, which is called the firm time. In periods of high volatility, the firm time becomes increasingly important to the seller, since the longer the period is between when the bid is offered and when it is honored, the more time the buyer has to revise the bid.

 

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