best-efforts basis


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Best-Efforts Basis

An agreement between an underwriter and an issuer in which the underwriter agrees to place as much of an offering with investors as possible, but is not responsible for any portion of the offering it fails to sell. For example, suppose an issuer makes a new issue of 100,000 shares. The issuer may make a best effort basis agreement with an underwriting firm for the underwriter to sell those shares to investors. If the underwriting firm only sells 90,000, however, it is not required to buy the remaining 10,000 from the issuer. This reduces the risk to the underwriter; to reduce the risk to the issuer, most best efforts are all-or-none offerings.

best-efforts basis

1. An agreement by an investment banker to do its best to oversee but not guarantee the sale of a security issue in the primary market. See also underwriter.
2. An investor's market order to buy or sell a security in which the brokerage firm agrees to obtain the best possible price.
References in periodicals archive ?
The financing will be on a best-efforts basis, and proceeds will be used to execute the Company's business plan.
will act as agent to offer the flow-through Class A shares on a best-efforts basis, and it is expected that this offering will close on Nov.
13, 1996--CABOT CREEK MINERAL (CANADIAN DEALING NETWORK: CABT) -- CABOT CREEK MINERAL CORPORATION ("Cabot") has entered into an agreement with GRIFFITHS McBURNEY & PARTNERS and FIRST MARATHON SECURITIES LIMITED (the "Agents") to act as agents on a best-efforts basis to offer 12,000,000 Special Warrants (the "Special Warrants") by way of private placement.
Lung Hwa has agreed to assist I/OMagic on a best-efforts basis in achieving a minimum of $6 million in revenues per year through sales to existing Lung Hwa North American OEM customers.