Preliminary Prospectus Red Herring

Preliminary Prospectus Red Herring

For those companies that are seeking to go public, filing a preliminary prospectus is mandatory. ¬†A ‚Äúpreliminary prospectus‚ÄĚ is commonly known as a ‚Äúred herring‚ÄĚ prospectus, which is essentially a document filed with the regulatory bodies prior to an exchange listing and IPO. ¬†Once the company has finalized all terms of the offering, they will then update their preliminary prospectus to what is known as a ‚Äúfinal prospectus‚ÄĚ. ¬†A preliminary prospectus is used for both debt and equity issuance such as stocks and bonds and notes. It is a formal legal document that is required by and filed with the relevant government financial securities regulator and relevant state securities regulator prior to the selling of public securities.¬† The red herring provides details about an investment offering for sale to qualified institutional investors or to the public at large, known as retail investors.¬†¬†There are many types of prospectus, some more well-known than others. The ‚Äúred herring‚ÄĚ, ‚Äúdraft red herring‚ÄĚ or ‚Äúdraft red herring prospectus‚ÄĚ (DRHP) and the Final Prospectus, also referred to as Statutory Prospectus, and “Offering Circular” are the most common.

Our team of securities industry consultants, investment banking veterans and attorneys can assist with the writing and drafting of your company’s business plan, feasibility study, offering prospectus or offering memorandum necessary for your capital formation process.

Preliminary and Selling Securities

For issuers considering selling equity shares or offering debt securities to investors, a well-tailored preliminary prospectus is mandatory, particularly  for any company wishing to obtain financing in the public markets.  A preliminary prospectus document provides protection to one’s business and is often required to raise either debt or equity financing.  A well-written preliminary prospectus will tell the story of the company, from the minute details of the types of securities being offered, e.g. stock versus bonds, to the management team, the market opportunity, the risk factors and the overall business plan model of the company, among many other details.  The final part of the prospectus is reserved for the subscription agreement, which is an essential component of any prospectus, as it is the contract between the issuer and the person buying the debt or equity securities.  A good preliminary prospectus will be used for multiple offerings in future issuance or offerings to the public.

Although the preliminary prospectus is first and foremost a document used to raise capital, the structure and presentation of the preliminary document can add value to a company’s products and services and team by portraying them in a well-polished format.  A preliminary prospectus shows an investor that one is serious and has gone the extra length to ensure regulatory compliance and good business practices.  Without a formal document that outlines the company’s business plan and securities structure it is often difficult to raise capital from any serious investor.

Our team at has years of experience writing preliminary prospectus for hundreds of varying industries and businesses.  We work one-on-one with our clients during the preliminary drafting process and take it upon ourselves to assist our clients with their quest for growth once our services are complete.

Contact Us Today To Schedule Your Free Consultation

Read More

Preliminary Prospectus Red Herring