At-the-Market Offering

An ATM, in the context of finance and securities offerings, stands for "At-the-Market" offering. It's a method used by publicly traded companies to sell newly issued shares gradually and incrementally into the open market through a designated broker-dealer at prevailing market prices. Here's how it differs from both IPOs and direct listings:

• ATM Offering vs. IPO:

  • An IPO is typically a one-time event where a company goes public by issuing new shares to raise capital with the assistance of investment banks. It involves setting a fixed price for the shares and selling them to institutional and retail investors.

  • In contrast, an ATM offering is a continuous or periodic process where a company sells already-existing shares into the market. It doesn't involve the issuance of new shares. The company can tap into the equity markets opportunistically, based on market conditions, to raise capital without the need for a formal public offering.

• ATM Offering vs. Direct Listing:

  • In a direct listing, existing shareholders sell their shares directly to the public without the involvement of underwriters or the issuance of new shares. It's essentially a way for insiders to achieve liquidity.

  • On the other hand, an ATM offering involves the sale of existing shares but does so through a designated broker-dealer. It can be used not only by insiders but also by the company itself to raise capital.

Key features of an ATM offering include:

• Flexibility: Companies can sell shares opportunistically, taking advantage of favorable market conditions without the need for a fixed offering price.

• Lower transaction costs: Since there's no need for an extensive marketing process or underwriting fees, the costs associated with an ATM offering can be lower compared to traditional public offerings.

• Control over timing: Companies can control the timing and pace of share sales, allowing them to raise capital gradually over an extended period.

In summary, an ATM offering provides a flexible and cost-effective way for publicly traded companies to raise capital by selling existing shares into the market gradually, distinguishing it from both IPOs and direct listings.

See also Public Equities.