An ATM offering should be in every firm’s financing toolbox
Companies in capital-intensive industries are always looking for funding, but uncertainty and unpredictability in the capital markets can make this process time consuming and expensive to execute. From our vantage point, Brinson Patrick sees this as an ongoing challenge for companies across the board, from technology to biotech, real estate investment trusts to financial services, hospitality, energy and beyond.
There are both internal and external uncontrollable variables that can impact this time-sensitive capital-raising process, and the cost of capital can be expensive for typical offering vehicles such as private placements and registered directs. To mitigate these issues, an at-the-market offering is a tool for companies that are seeking to build long-term financing strategies that incorporate several financing vehicles to provide flexibility and reduce the overall cost of capital.
Flexibility when raising capital
At-the-market financing like our DOCS® (Dynamic Offering of Common Stock) ATM financing facility is a capital-raising instrument that provides flexibility, efficiency, control, discretion and just-in-time capital. It allows companies of all shapes and sizes to raise incremental capital over time. Unlike a large capital raise, which may leave large amounts of cash underutilized for months, ATM financing is ideal for raising general working capital, funding specific projects, funding R&D, and paying off debt.
ATMs can be started and stopped, and efficiently ramped up to raise money when there’s an opportunity or additional need. And an at-the-market offering is generally less expensive and less complicated to execute, requiring much less executive time since there’s no need for road shows and other public relations’ displays. Unlike traditional financing, at-the-market offerings do not send a signal to the market that a company needs financing. Neither do they require shareholder approval or dilute existing shareholders through discounting or issuing warrants, issues common to traditional capital raises. And for this reason, at-the-market offerings such as Brinson Patrick’s DOCS® ATM are usually viewed favorably by shareholders.