Best Effort Agreement
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Best Effort Agreement
In investment banking, an underwriting contract"The Investment Banking Handbook" by J. Peter Williamson, 1988, ""Underwriting Contracts", p. 128/ref> is a contract between an underwriter and an issuer of security (finance), securities. The following types of underwriting contracts are the most common: * In the ''firm commitment contract,'' the underwriter guarantees the sale of the issued stock at the agreed-upon price. For the issuer, it is the safest but the most expensive type of the contracts, since the underwriter takes the risk of sale. * In the ''best efforts contract,'' the underwriter agrees to sell as many shares as possible at the agreed-upon price. * Under the ''all-or-none contract'', the underwriter agrees either to sell the entire offering or to cancel the deal. ''Stand-by underwriting'', also known as ''strict underwriting'' or ''old-fashioned underwriting'' is a form of stock insurance: the issuer contracts the underwriter for the latter to purchase the shares the ...
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Investment Banking
Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by underwriting or acting as the client's agent in the issuance of debt or equity securities. An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities, FICC services (fixed income instruments, currencies, and commodities) or research (macroeconomic, credit or equity research). Most investment banks maintain prime brokerage and asset management departments in conjunction with their investment research businesses. As an industry, it is broken up into the Bulge Bracket (upper tier), Middle Market (mid-level businesses), and boutique ...
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