What is a Best Efforts Offering?
Just as with the firm commitment offering, the best efforts offering is an arrangement where an agent agrees to take on the task of selling securities on behalf of the owner. However, there is one key difference. With a best efforts offering, the agent does not guarantee that the sale will take place within a given time frame or that a particular amount of revenue will be realized from the venture. At the same time, the agent does pledge to make a reasonable effort to sell the offering, and will keep the best interests of the client in mind. Underwriting agents who commit to best efforts offering services often include investment banks. Working with the issuing company, the investment bank will analyze the offering, looking at a number of factors that have some relation to the security. These factors may include reviews of past performance, current standing within the market, and the projected performance based on overall market conditions. This allows the agent to come up with specifi
