Small cap companies are using new tools to raise capital in a stock market which is volatile and unpredictable. One of those new tools is called an “at the market” offering or ATM.
An “at the market” offering enables a company to be opportunistic about when it raises capital. Sometimes called a “dribble out” offering, companies can use an ATM to raise capital a little at a time over many months.
Alternatively, if the stock market is receptive, a company could also use an ATM to raise capital in one big offering. In order to use an ATM offering, a company must register shares with the SEC on a “shelf” offering. Investors who buy in an ATM get fully registered shares. This feature increases the universe of potential investors and reduces any liquidity discount.
As the name implies, the shares are priced “at the market”.
The corporate ATM is becoming increasingly popular as companies come to understand its features.
In a recent blog post, I describe features of an “at the market” offering and contrast these with an equity line, another increasingly popular means for companies to raise capital over time.
