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Financial Terms and Glossary

Knockdown price

Knockdown Price

A knockdown price refers to a significantly reduced price at which an asset or product is sold, typically below its market value. This term is often used in the context of auctions or distressed sales where assets are sold quickly, often due to financial pressure or to offload inventory. A knockdown price can attract buyers looking for bargains but may also indicate that the seller is in a weak negotiating position or facing liquidity issues.

Example

A company facing financial distress sells its real estate at a knockdown price of 30% below market value to raise cash quickly.

Key points

• Refers to a heavily discounted price, often below market value.

• Common in auctions, distressed sales, or inventory liquidation.

• Can attract bargain hunters but may indicate seller distress.

Quick Answers to Curious Questions

What does a knockdown price typically indicate?

It often indicates a distressed sale or a seller’s urgency to offload an asset quickly, usually at a price below market value.

Why might a company sell assets at a knockdown price?

Companies may sell at knockdown prices to raise cash quickly, manage liquidity issues, or dispose of excess inventory.

What are the risks of buying assets at knockdown prices?

Buyers may face risks related to the asset’s condition, the seller’s financial instability, or the broader market environment.

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