Going to the ATM. At the Market Public Offering
An at-the-market (ATM) offering is a type of secondary offering whereby a public company sells its existing shares directly to the market at prevailing market prices through a broker-dealer. The company can sell shares through an ATM offering at any time, and the amount of shares sold can vary depending on the company’s needs.
ATM offerings are a common way for companies to raise capital, and they can be a good option for companies that want to avoid the costs and scrutiny associated with a traditional secondary offering. ATM offerings can also be a good way for companies to raise capital quickly, as they can be done without having to file a prospectus or obtain shareholder approval.
However, there are also some risks associated with ATM offerings. For example, if the market price of the company’s shares falls below the offering price, the company could lose money. Additionally, ATM offerings can dilute the value of existing shares.
Overall, ATM offerings can be a good way for companies to raise capital, but it is important to weigh the risks and benefits before deciding whether to do an ATM offering.
What is the purpose of an ATM offering?
The purpose of an ATM offering is to raise capital for the company. The company can use the proceeds from the offering for any purpose, such as to repay debt, fund an acquisition, or invest in research and development.
How does an ATM offering work?
An ATM offering works by allowing the company to sell its shares directly to the market at prevailing market prices. The company can sell shares through an ATM offering at any time, and the amount of shares sold can vary depending on the company’s needs.
When a company conducts an ATM offering, it will typically hire a broker-dealer to help it sell the shares. The broker-dealer will then sell the shares to investors at the prevailing market price. The company will receive the proceeds from the sale of the shares, which it can then use for whatever purpose it deems necessary.
What are the benefits of an ATM offering?
There are a number of benefits to conducting an ATM offering. For example, ATM offerings can help companies to raise capital quickly and easily. Additionally, ATM offerings can help companies to avoid the costs and scrutiny associated with a traditional secondary offering.
ATM offerings can also be a good way for companies to raise capital from a wider range of investors. This is because ATM offerings can be done without having to file a prospectus or obtain shareholder approval. This means that ATM offerings can be open to a wider range of investors, including retail investors and institutional investors.
What are the risks of an ATM offering?
There are also some risks associated with ATM offerings. For example, if the market price of the company’s shares falls below the offering price, the company could lose money. Additionally, ATM offerings can dilute the value of existing shares.
Overall, ATM offerings can be a good way for companies to raise capital, but it is important to weigh the risks and benefits before deciding whether to do an ATM offering.
How does an ATM offering affect the company’s stock price?
The impact of an ATM offering on the company’s stock price can vary depending on a number of factors, such as the size of the offering, the company’s financial condition, and the market conditions. However, generally speaking, ATM offerings can cause the company’s stock price to decline. This is because the sale of new shares increases the supply of shares available to the market, which can drive down the price of the stock.
What are some of the alternatives to ATM offerings?
There are a number of alternatives to ATM offerings, such as traditional secondary offerings, private placements, and debt financing. The best option for a company will depend on a number of factors, such as the amount of capital needed, the company’s financial condition, and the market conditions.
Here are some of the key documents and timing involved in an ATM offering:
- Equity Distribution Agreement: This is an agreement between the company and the broker-dealer that will be selling the shares. The agreement will outline the terms of the offering, such as the price of the shares and the commission to be paid to the broker-dealer.
- Prospectus: This is a document that must be filed with the Securities and Exchange Commission (SEC) before the offering can commence. The prospectus will provide information about the company and the offering, such as the company’s financial condition and the use of the proceeds from the offering.
- Form 8-K: This is a report that must be filed with the SEC within 15 days of the completion of the offering. The Form 8-K will provide information about the results of the offering, such as the amount of shares sold and the proceeds received by the company.
The timing of an ATM offering can vary depending on the company and the market conditions. However, typically, the company will file the prospectus with the SEC and begin the offering process several weeks before it actually needs the proceeds from the offering. This allows the company to gauge investor interest and adjust the terms of the offering as needed.
The company will typically continue to sell shares through the ATM offering until it has raised the desired amount of capital. Once the company has raised the desired amount of capital, it will terminate the ATM offering and cease selling shares.
