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Best Efforts Offering

Best Efforts Offering

  • Term

    Main definition

  • 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.

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