A stalking horse bid is a confidential bid made by a potential buyer on a company that is being sold through a bankruptcy or insolvency process. The goal of the bid is to spark competition among other potential buyers and increase the value of the asset.
When a company or property is going to be sold in order to pay off debts or raise capital, stalking horse bids are used. The stalking horse bidder will make an initial bid, which serves as the beginning of negotiations and a reference point for future bids. The initial bid can help the company achieve a higher sale price, as other potential buyers will know that they must make higher bids in order to secure the asset.
The stalking horse bidder is usually chosen by the bankruptcy court based on their financial resources, business experience, and expertise in the particular asset being sold The stalking horse bidder may be chosen if they are able to complete the transaction quickly.
The stalking horse bid can help the seller save time and money by decreasing the amount of time it takes to find a buyer and close the transaction. The seller doesn’t have to start from scratch because the stalking horse bidder has already done some of the research necessary to identify potential buyers.
The stalking horse bid gives the seller some protection from lowball offers as other potential buyers know that they must make higher bids in order to be successful. In the event that the stalking horse bidder’s bid is unsuccessful, they may be given certain protections.
The stalking horse bid can help protect the seller from potential liability and give assurance that the sale will be conducted in a fair and orderly manner. The stalking horse bidder is held to a certain standard of conduct by the bankruptcy court.
A stalking horse bid is an initial bid made by a potential buyer on a company or property that is being sold through insolvency. The intention of the stalking horse bid is to spark competition among other potential buyers and increase the overall value of the asset. The stalking horse bidder is usually chosen by the bankruptcy court and given certain protections if their bid is not successful. The stalking horse bid can help the seller save time and money, protect them from potential liability, and give them some assurance that the sale will be conducted in a fair and orderly manner.