As a professional, I have written an article on “Different Types of Underwriting Agreements.” This article will help readers understand the various types of underwriting agreements and how they differ from each other.

Underwriting agreements are contracts between an underwriter and an issuer of securities, such as stocks or bonds. These agreements define the terms of the sale of the securities, including the price and the number of shares or bonds being sold. There are several types of underwriting agreements, each of which has its own unique characteristics.

1. Firm Commitment Underwriting

Firm commitment underwriting is the most common type of underwriting agreement. In a firm commitment underwriting, the underwriter agrees to buy all of the securities being offered by the issuer and then resell them to the public. The underwriter takes the risk of not being able to resell all of the securities at a profit, which is why the underwriter is paid a commission.

2. Best Efforts Underwriting

In a best efforts underwriting, the underwriter agrees to use their best efforts to sell the securities on behalf of the issuer, but does not guarantee that all of the securities will be sold. The underwriter is not obligated to buy any unsold securities, so the issuer takes on the risk of not being able to sell all of the securities.

3. Standby Underwriting

In a standby underwriting, the underwriter agrees to purchase any unsold securities during a rights offering. A rights offering is when a company offers its existing shareholders the right to purchase additional shares of the company’s stock at a discounted price. If the existing shareholders do not exercise their rights to purchase the additional shares, the underwriter agrees to buy the remaining shares.

4. All or None Underwriting

In an all or none underwriting, the underwriter agrees to sell all of the securities being offered by the issuer or none at all. If the underwriter cannot sell all of the securities, the underwriting is canceled and the issuer receives no money.

5. Mini-Maxi Underwriting

A mini-maxi underwriting is a hybrid of firm commitment and best efforts underwriting. In a mini-maxi underwriting, the underwriter agrees to sell a minimum number of securities (the mini) and will try to sell as many securities as possible up to a maximum (the maxi). If the underwriter cannot sell the minimum number of securities, the underwriting is canceled.

In conclusion, there are several types of underwriting agreements that issuers can use to sell their securities. Each type of underwriting agreement has its own unique characteristics and risks. Understanding the differences between the types of underwriting agreements can help issuers choose the best option for their needs.