Podcast
Questions and Answers
What happens in a best efforts contract if all the shares being issued cannot be sold within a specific period of time?
What happens in a best efforts contract if all the shares being issued cannot be sold within a specific period of time?
- The underwriter takes on the risk of unsold shares
- The underwriter buys the remaining unsold shares
- The offering is withdrawn completely (correct)
- The offering is extended indefinitely
What is the usual timeframe for selling minimum numbers of shares in best efforts contracts?
What is the usual timeframe for selling minimum numbers of shares in best efforts contracts?
- Varies depending on the company size
- Over 180 days
- Around 90 days (correct)
- Less than 30 days
What type of contracts are commonly used by smaller issuers for IPOs?
What type of contracts are commonly used by smaller issuers for IPOs?
- Auction contracts
- Best efforts contracts (correct)
- Hybrid contracts
- Firm commitment contracts
Which type of contract is usually employed for IPOs raising more than $10 million?
Which type of contract is usually employed for IPOs raising more than $10 million?
Why do best efforts contracts, on average, yield higher transaction fees than firm commitment deals?
Why do best efforts contracts, on average, yield higher transaction fees than firm commitment deals?
In a fixed price offering IPO, how is the share price determined?
In a fixed price offering IPO, how is the share price determined?
What happens to the share price in a book-building process for an IPO?
What happens to the share price in a book-building process for an IPO?
What characteristic defines a best efforts contract as 'all or nothing'?
What characteristic defines a best efforts contract as 'all or nothing'?
What is a key factor contributing to higher transaction fees with best efforts contracts compared to firm commitment deals?
What is a key factor contributing to higher transaction fees with best efforts contracts compared to firm commitment deals?
What pricing approach is taken in firm commitment contracts for IPOs?
What pricing approach is taken in firm commitment contracts for IPOs?
