The main kinds of equity offerings
Beyond the initial public offering, public companies raise equity through follow-on offerings, often off a shelf registration statement that lets them move quickly when market conditions allow. At-the-market programs let a company sell shares into the market gradually through a sales agent. Registered direct offerings and private investments in public equity, often called PIPEs, place stock with a limited group of investors, sometimes overnight. Convertible securities and preferred stock add other options. Which route is available depends on the company's reporting history, its size, and whether it is eligible to use short-form registration.
Disclosure, timing, and trading rules
Before any offering, the company must consider whether it holds material information that has not been disclosed, because selling stock while sitting on significant news creates liability risk. Exchange rules may require shareholder approval for issuances above certain thresholds or at a discount, and those rules are frequently overlooked in private placements. Underwriters will ask for diligence calls, comfort letters, and legal opinions even on a quick deal. Directors and officers who want to sell in the same offering, or who are subject to lockups, need advice on trading restrictions and reporting. Marketing communications are regulated as well, so the deal team should coordinate public statements with counsel.
What we consider at the start
We start by asking how much the company wants to raise, how quickly, and how much dilution and market impact it can accept. We then review its registration statements, eligibility for shelf and short-form filings, existing investor rights such as preemptive or registration rights, and any exchange approval requirements. For foreign private issuers, we look at how the offering interacts with home-country rules and depositary arrangements. Finally, we map the documents, approvals, and calendar so the company can move when its window opens.
