Investopedia

Continue to Site »

Competitive Bid

Filed Under »
Dictionary Says

Definition of 'Competitive Bid'

A step in the initial public offering process whereby an underwriter submits a sealed bid to a company that is making its first issue of stock. After collecting competitive bids from several underwriters, the issuer awards the contract to the underwriter with the best price and contract terms. Competitive bidding is considerably less common than negotiated bidding, the other main method by which issuing companies contract with underwriters. Competitive bidding is more common with municipal bonds issued by utility companies.
Investopedia Says

Investopedia explains 'Competitive Bid'

Underwriting is a crucial step in the IPO process. Underwriters are usually investment banks, and they are responsible for selling the stock of the company that is going public. A firm is more likely to use a negotiated bidding process in selecting an underwriter because it wants to work with a familiar firm (such as the one that managed its venture capital financing) or a firm that has an excellent reputation. In fact, it's common to use several underwriters, called a syndicate, which share the risk of selling the IPO shares.

Articles Of Interest

  1.

    Is Insurance Underwriting Right For You?

    If you have excellent analytical skills and an eye for detail, this may be your calling.

  2. The Alphabet Soup Of Financial Certifications

    We decode the meaning of the many letters that can follow the names of financial professionals.

  3. Greenshoe Options: An IPO's Best Friend

    Find out how companies can save or boost their public offering price with these options.

  4. IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.

  5. Pinnacle Foods Gains 11% In IPO Debut--Now What?

    Blackstone Group brought Pinnacle Foods (NYSE:PF) to market March 28. The maker of Vlasic pickles and other well known brands saw its stock jump more than 12% in its first day of trading. Should ...

  6. Investing In IPO ETFs

    Learn the history, rules and risks of investing in IPO exchange-traded funds.

  7. Buy or Sell: Norwegian Cruise Line's IPO Up 31% On First Day Of Trading

    NCLH gained 31% on November 17, its first day of trading. Does this mean it is a buy, sell or hold?

  8. Reverse Takeover

    Learn more about this type of takeover and how companies use it to avoid IPOs.

  9. The Fundamental Mechanics Of Investing

    Here's a story that demonstrates why stocks and bonds were created and how they are valued.

  10. How are share prices set?

    When a company goes public though an initial public offering (IPO), an investment bank evaluates the company's current and projected performance and health to determine the value of the IPO for ...
comments powered by Disqus
Marketplace
Hot Definitions

  1. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  2. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  3. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.

  4. Angelina Jolie Stock Index

    An index made up of a selection of stocks from companies associated with actress Angela Jolie.

  5. Consequential Loss

    The amount of loss incurred as a result of being unable to use business property or equipment.

  6. Lease To Own

    An arrangement where an individual enters into a lease agreement with an owner with the inclusion of a clause that typically gives the individual the right, but not the obligation, to purchase the item leased at a predefined price and time.
Trading Center