Methods of Distribution

What this video covers

• Firm commitment versus standby: both place risk on the placement agent, but firm commitment is an up-front purchase while standby triggers only at the end of the offering period
• Best efforts: why the placement agent never buys unsold securities and the issuer alone bears any shortfall
• All-or-none (AON): the single sell-all-or-refund-all trigger that cancels the entire offering if any amount remains unsold
• Mini-max: the dual threshold structure with a floor that must be met to close and a ceiling that caps total sales
• Why all-or-none and mini-max never put the placement agent at risk, since both remain best-efforts variants where the agent never purchases the shortfall
• The exam trap of searching for an SEC or FINRA rule that defines these terms, when they are pure industry vocabulary with no single regulatory definition