Unsolicited Bid

Categories: Trading, Banking

See: Unsolicited Order.

"Not solicited" = "not asked for, tyvm."

It came out of nowhere. The company had no "For Sale!" sign on its front porch. The investor or individual or private equity corporate raider just knocked on the door with a lawyer, served a note and said, "Hi. I want to buy ya." Then a whole bunch of things get kicked off, the biggest of which is that the Board of Directors has to be notified, assuming that this is a real and legitimate bid. That is, if someone sends a registered letter to the General Counsel of Google, who puts his pants on, walks down the hall, and reads it, and it says, "I'm Bob. I want to buy all of the assets of GOOG for $100"...well, that's not legit. But if it's Amazon hitting up Ring to buy them for a bil and change, then the process kicks off. Board is notified. They quickly meet. They decide if they like the bid. They decide if they want to hire a banker to use this bid as a stalking horse to bring higher bids from others. They decide if they want to sell the company at all...maybe they determine it'll be worth 3x as much in 5 years. Whatever the process, they have to pay lawyers to kibbitz with them and cover the legitimacy of the bid, as their core job is to work for shareholders.

If you're ever bored, Google the unsolicited bid that Microsoft made for Yahoo for a huge number...which Yahoo's board turned down, only to have Yahoo eventually sold for scrap at a massively lower number a few years later. One of the great corporate board debacles in history. Frothy reading. Sad end to a once-great company, courtesy of simply bad board management.

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Finance: What is an Unsolicited Order?3 Views

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finance a la shmoop what is an unsolicited order

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alright well people it's just an order like to buy or sell a stock or bond or [Definition of unsolicited orders]

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derivative security that you instruct your broker to execute all on your

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lonesome that is the broker or another professional did not recommend you doing [Guy stood in front of Walmart]

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that trade you did research on your own consulted alpha magazine and The Motley [The magazine on a disk]

00:26

Fool noted the massive number of Spinney fidgets things that were selling off the

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shelves the last time you visited Walmart and decided to make an investing

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statement based on that observation and in placing an unsolicited order you are

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legally on your own if things fail ie the broker is exempt from any liability [Exempt from liability stamp]

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for having made an incorrect or improper recommendation or whatever in real life

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brokers have so many layers of legal coverage above their recommendations [A wedding cake]

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that no it really doesn't matter if they sell you 20 bad stocks in a row you just

00:58

have to be appropriate for what you checked on the boxes in the form that [Investment criteria checklist]

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you sent to them that well they're still likely immune to prosecution anyway yeah

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no recourse or well your only recourse is to just fire them and hire this guy [Bonzo the chimp appears]

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to pick stocks for yes yeah asking yourself well really how much worse

01:15

could he do had your broker been the one to stumble on the many sold out signs of

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spinny things at Walmart and then she called you to suggest you buy shares of [Broker calling a client]

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spinny fidget time-wasters.com well then the order would have been

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considered a solicited one and in theory solicited orders carry a higher weight [Exempt from liability stamp is wiped away]

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of scrutiny should something go awry and regulators get involved and basically it

01:40

revolves around that recommendation being appropriate to the risk levels and

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duration levels and other levels of investing prowess that you proffer that

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you actually have and yeah those regulators they mean business you really [Regulator holding a baseball bat]

01:53

don't want to be on their bad side

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