Counteroffer

AAA

DEFINITION of 'Counteroffer'

A type of offer made in response to another offer, which was seen as unacceptable. A counteroffer revises the initial offer, making it more appealing for the person making the new offer. Responding with a counteroffer allows a person to decline on a previous offer, while allowing negotiations to continue.

INVESTOPEDIA EXPLAINS 'Counteroffer'

When a person makes a counteroffer, he or she is rejecting the previous offer and rendering it void. Because the original offer is now void, the person who made that offer is no longer legally responsible for honoring it. For example, let's say you are selling a vehicle. A buyer arrives and offers you $10,000 for the car. In an attempt to get a higher price, you counteroffer, asking for $11,000. If the buyer declines, you cannot force them to buy the car at $10,000, even though they have already offered at that price.

RELATED TERMS
  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for ...
  3. Retract

    The withdrawal of a bid, offer or statement before any relevant ...
  4. Godfather Offer

    An irrefutable takeover offer made to a target company by an ...
  5. Tender Offer

    An offer to purchase some or all of shareholders' shares in a ...
  6. Open Offer

    A secondary market offering that is similar to a rights issue ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. Trade Takeover Stocks With Merger Arbitrage
    Active Trading Fundamentals

    Trade Takeover Stocks With Merger Arbitrage

  3. Pinpoint Takeovers First
    Options & Futures

    Pinpoint Takeovers First

  4. When is a takeover bid legally canceled?
    Investing

    When is a takeover bid legally canceled?

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center