Legal Definitions - all-or-none offering

An all-or-none offering is a type of securities offering where a company (the issuer) seeks to raise capital by selling a specific amount of securities, such as shares or bonds, to investors. The critical condition of this offering is that the issuer must sell all of the specified securities by a predetermined deadline. If the full amount is not sold, then none of the sales are completed, and all funds collected from potential investors are returned to them.

This structure is designed to protect both the investors and the issuer. Investors are protected from putting money into a project or company that ultimately fails to raise sufficient capital to achieve its goals. The issuer is protected by ensuring they only proceed with their plans if they secure the full amount of funding deemed necessary for success.

Here are some examples illustrating an all-or-none offering:

• Startup Initial Public Offering (IPO): A new technology startup aims to raise $25 million through an IPO to fund the development and launch of its innovative software platform. The investment bank managing the offering structures it as an all-or-none deal, setting a deadline of 60 days. If the startup successfully sells all $25 million worth of shares by the deadline, the IPO proceeds, and the company receives the capital. However, if they only manage to sell $20 million in shares, the all-or-none condition is not met. In this scenario, all $20 million collected from investors is returned, and the IPO is canceled, preventing the startup from launching its platform with insufficient funds.

• Real Estate Development Project: A real estate developer plans to build a luxury condominium complex and needs to raise a minimum of $50 million from private investors to acquire the land and begin construction. They structure this fundraising as an all-or-none offering with a six-month window. If, by the end of six months, they have secured commitments for the full $50 million, the project moves forward, and investor funds are released. But if they only manage to raise $40 million, the offering fails. All $40 million committed by investors is returned, and the developer cannot proceed with the project, protecting investors from a potentially underfunded and stalled development.

• Biotechnology Research Funding: A small biotechnology firm is seeking $10 million to complete a crucial phase of clinical trials for a new drug. They launch an all-or-none private placement offering to institutional investors. The firm believes that anything less than $10 million would jeopardize the trial's completion and the drug's path to market. If they successfully secure commitments for the entire $10 million by the specified date, the funds are transferred, and the trials proceed. If they only raise $8 million, the offering is terminated, and all investor funds are returned, ensuring that the critical research is not undertaken with inadequate financial resources.