Dutch auction

Dutch auction
USA
Dutch auction, Also known as descending price auction.
A type of offering which uses a bidding process to find an optimal market price for a security, the lowest price at which an issuing company can sell all the available securities. In a Dutch auction, the company offers its securities for bid at a high price. The initial price is high enough that the company does not expect to sell any securities. Because bidders must know the amount of the bids, bids are not sealed as they are in some types of auctions. The company lowers the price until someone agrees to buy securities and continues to lower the price so that more investors agree to buy securities. The company continues to lower the price until all of the securities being offered are spoken for. At auction's end, the company sells all of the securities it planned to offer, and the bidders get the number of securities they agreed to buy, but all at the price bid by the last bidder. An alternative to the traditional negotiated pricing process used by underwriters to set IPO prices, it was most recently used by Google and is used for US Treasury auctions.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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  • Dutch auction — Dutch Dutch, a. [D. duitsch German; or G. deutsch, orig., popular, national, OD. dietsc, MHG. diutsch, tiutsch, OHG. diutisk, fr. diot, diota, a people, a nation; akin to AS. pe[ o]d, OS. thiod, thioda, Goth. piuda; cf. Lith. tauta land, OIr.… …   The Collaborative International Dictionary of English

  • Dutch auction — Auction Auc tion, n. [L. auctio an increasing, a public sale, where the price was called out, and the article to be sold was adjudged to the last increaser of the price, or the highest bidder, fr. L. augere, auctum, to increase. See {Augment}.] 1 …   The Collaborative International Dictionary of English

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  • Dutch auction — n. an auction in which an initially high offering price is lowered by increments until a buyer or, as in U.S. Treasury sales of securities, sufficient buyers are found …   English World dictionary

  • Dutch auction — n [U and C] a public sale at which the price of something is gradually reduced until someone will pay it …   Dictionary of contemporary English

  • Dutch auction — noun count a sale in which the price of something gradually goes down until someone agrees to buy it …   Usage of the words and phrases in modern English

  • Dutch auction — ► NOUN ▪ a method of selling in which the price is reduced until a buyer is found …   English terms dictionary

  • Dutch Auction — 1. A public offering auction structure in which the price of the offering is set after taking in all bids and determining the highest price at which the total offering can be sold. In this type of auction, investors place a bid for the amount… …   Investment dictionary

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