What Does Competitive Tension Mean?
Competitive tension refers to the pressure perceived by potential acquirers of a target company when they are aware that there are one or more other parties simultaneously vying to acquire the same target. In such a situation, each potential acquirer feels compelled to offer the highest purchase price and/or most attractive transaction terms it possibly can; otherwise it risks an outcome where one of the rival buyers acquires the target company.

Divestopedia Explains Competitive Tension
Competitive
tension is a highly favourable condition from the perspective of the seller as
it creates an environment that typically results in increased deal valuations
and improved transaction terms, while mitigating transaction risk. Target
companies, or their agents, will generally strive to maximize competitive tension,
subject to other concerns such as confidentiality, through a carefully-managed
and well-executed sale process which includes multiple competing acquirers,
such as an auction.