When it comes to buying and selling assets in the financial markets, having a clear and well-structured sales agreement is crucial. An „at the market“ offering sales agreement (ATM) is a type of agreement used in securities trading that allows a company to sell its shares directly to the public, at market prices. In this article, we will explore the key features of an ATM, its benefits, and how to draft an effective ATM sales agreement.
What is an ATM Offering Sales Agreement?
An ATM offering sales agreement is a type of agreement that allows companies to sell their securities, such as shares, directly to the public on an exchange, at market prices. This type of offering can be used by both public and private companies and is typically used for raising capital quickly and efficiently. An ATM offering can be initiated at any time and does not require the company to issue a new prospectus or file new registration statements with the Securities and Exchange Commission (SEC).
Benefits of an ATM Offering Sales Agreement
One of the most significant advantages of an ATM offering is its flexibility. ATM offerings can be initiated at any time, allowing companies to raise capital when market conditions are favorable. They are also cost-effective, as they do not require the issuance of new prospectuses or registration statements, which can save time and money in legal and regulatory fees.
Another benefit of an ATM offering is that it allows companies to sell their securities directly to the public, which can increase liquidity. This can be especially beneficial for small-cap companies with limited trading volume, as it can increase the company`s visibility and attract new investors.
Drafting an Effective ATM Sales Agreement
When drafting an ATM sales agreement, it is essential to ensure that the document clearly outlines the terms and conditions of the offering. Here are some key elements to include:
1. Offering Terms: The agreement should specify the number of shares being offered, the offering price, and any applicable fees or commissions.
2. Representations and Warranties: The company should make certain representations and warranties about the accuracy and completeness of the disclosure materials and financial statements.
3. Indemnification: The agreement should include indemnification provisions, which protect the company from any claims or losses resulting from the offering.
4. Termination: The agreement should specify the conditions under which the offering can be terminated, such as a market disruption or a change in the company`s financial condition.
Conclusion
In conclusion, an ATM offering sales agreement is a flexible and cost-effective way for companies to raise capital quickly and efficiently. By selling their securities directly to the public, companies can increase liquidity and attract new investors. When drafting an effective ATM sales agreement, it is essential to ensure that the document clearly outlines the terms and conditions of the offering, including offering terms, representations and warranties, indemnification, and termination provisions.