IPOs - Speak The Basics (Very Good Reading) (2)

American Depositary Receipts (ADRs) -

These are offered by non-US companies wishing to list on a US exchange.

They are called "receipts" because they represent a certain number of a company's regular shares.


Aftermarket performance -

Used to describe how the stock of a newly public company has performed with the offering price as the typical benchmark.

All or none An offering which can be canceled by the lead underwriter if it is not completely subscribed.

Most best-effort deals are all or none.


Best effort -

A deal in which underwriters only agree to do their best to sell shares to the public, as opposed to much more common bought, or firm commitment, deals.


Book -

A list of all buy and sell orders put together by the lead underwriter.



Bought deal -

An offering in which the lead underwriter buys all the shares from a company and becomes financially responsible for selling them.

Also called firm commitment.


Break issue -

Term used to describe a newly issued stock that falls below its offering price.


Completion -

An IPO is not a done deal until it has been completed and all trades have been declared official. Usually happens about five days after a stock starts trading.

Until completion, an IPO can be canceled with all money returned to investors.


"By Darren Chervitz, CBS MarketWatch"