Best Efforts Offering
A commitment by a syndicate of investment banks to use best efforts to ensure the sale to investors of a company's offering of securities.
In a best efforts offering, the syndicate avoids any firm commitment for a specific number of shares or bonds. Underwritten public offerings are either firm-commitment offerings or best-efforts offerings. In a firm-commitment underwriting, the underwriter commits itself to purchase the entire offering and assume the risk that it cannot resell all of it. Private offerings that use a placement agent are conducted by the agent on a best efforts basis only, and placement agents act like an agent for the company. Unlike an underwriter, they do not acquire and resell the securities.