Offering

Equity Term

An offering is a unified set of similar securities designed to be sold to multiple investors at the same time in a managed process.

An Initial Public Offering (IPO) is probably the most celebrated. In an IPO, companies sell similar common shares to public investors for the first time. Usually investment bankers are hired to manage IPOs, which start with extensive documentation and a “road show” to pitch investors. The IPO concludes with the new securities sold at a single price to many investors. The investors are then free to sell those securities to other investors through a public stock exchange.

In addition, many small and young companies finance their businesses through private securities offerings. For example, high potential companies may try to raise a Series A preferred share offering. Typically the Series A attracts the first venture capital investors in a company.

With help of advisors, companies set both the terms of the offering as well as the target amount to be raised. The terms are very specific and detailed, while the target amount will often be a range with both a minimum and maximum.

Don Gooding

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