Back Stop

Dictionary Says

Definition of 'Back Stop'

The act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares. A company will try and raise capital through an issuance and to guarantee the amount received through the issue, the company will get a back stop from an underwriter or major shareholder to buy any of the unsubscribed shares.
Investopedia Says

Investopedia explains 'Back Stop'

For example, in a rights offering you might hear "ABC Company will provide a 100% back stop of up to $100 million for any un-subscribed portion of the XYZ Company rights offering." If XYZ is trying to raise $200 million but only raises $100 million through investors then ABC Company will purchase the remainder.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Rights Offering (Issue)

    An issue of ...
  2. Initial Public Offering - IPO

    The first sale ...
  3. Underwriting

    1. The process ...
  4. Capital

    1. Financial ...
  5. Venture Capital

    Money provided ...
  6. Subsequent Offering

    An offering of ...
  7. Investment Bank - IB

    A financial ...
  8. Backstop Purchaser

    An entity that ...
  9. Backlog

    A build-up of ...
  10. Minimum Wage

    The minimum ...

Articles Of Interest

  1. How To Interpret A Company's Prospectus

    Learn to decipher the secret language of the prospectus - it can tell you a lot about a company's future.
  2. Analyst Recommendations: Do Sell Ratings Exist?

    Analyst reports can be an investor's best friend - but without knowing how to read them, you won't be able to fully utilize them.
  3. 5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  4. Brokerage Functions: Underwriting And Agency Roles

    Learning about these various activities can give insight into how securities are issued and traded.
  5. IPO Lock-Ups Stop Insider Selling

    Ownership plays a key role when companies go public. Find out how.
  6. Carl Icahn's Investing Strategy

    Buying up failing investments and turning them around helped to create the "Icahn lift" phenomenon.
  7. Finding Solid Buy-And-Hold Stocks

    Find out how to look at the big picture - even when the market's short-term outlook is less than rosy.
  8. Female Managers Can Raise Share Values

    Women are quite capable of proving their worth in raising corporate value through various financial, managerial and human capabilities.
  9. Introduction To Incentive Stock Options

    Here are some basic highlights of how ISOs work and the ways they can be used.
  10. Beware Of Company Stock In Qualified Plans

    While this strategy does have a few advantages, it can also pose some substantial risks to employees.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center