Common Contracts
1 similar Standby Underwriting Agreement contracts
Standby underwriting is an IPO sales agreement in which the underwriter commits to buying shares, regardless of whether or not it can sell to the public. In a firm commitment, the underwriting investment bank provides a.Standby Underwriting Agreement • November 30th, 2021
A standby underwriting agreement is used in conjunction with a preemptive rights offering. Other Examples of a Firm Commitment The two other common applications of a firm commitment are for loans and derivatives. A firm commitment sale method contrasts with the best efforts and standby commitment basis. The underwriting agreement contains the details of the transaction, including the underwriting group's commitment to purchase the new securities issue, the agreed-upon price, the initial resale price, and the settlement date. A right entitles its holder to purchase a specified amount of shares prior to a public offering, and typically at a lower price than what will be offered to the public. Key Takeaways A standby underwriting agreement stipulates that after an IPO, an investment bank will buy remaining shares that have not been purchased by the public. For taking on this risk through a firm commitment, the dealer profits from a negotiated spread between the purchase price from the iss
