Pathfinder Prospectus


DEFINITION of 'Pathfinder Prospectus'

A pre-prospectus statement of financial condition that is sent to a limited group of potential underwriters and institutional investors prior to a securities or IPO filing. The goal of a pathfinder prospectus is to create demand and eventually set the price for the offering, as well as to clear up any inconsistencies in the company's published financial statements.

BREAKING DOWN 'Pathfinder Prospectus'

The pathfinder prospectus will contain almost all of the same information as an IPO prospectus except for the price of the shares, which will be set once underwriters get a feel for the overall demand. If demand is high enough, the underwriter syndicate will most often use its over-allotment right to issue extra shares, providing added profit to the investment banks and more financing to the company.

  1. Investment Bank - IB

    A financial intermediary that performs a variety of services. ...
  2. Syndicate

    A professional financial services group formed temporarily for ...
  3. Overallotment

    An option commonly available to underwriters that allows the ...
  4. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  5. Prospectus

    A formal legal document, which is required by and filed with ...
  6. Dog And Pony Show

    A colloquial term that generally refers to a presentation or ...
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    An initial public offering (IPO) is the first sale of stock by a company. Small companies looking to further the growth of ... Read Full Answer >>
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    Underwriters represent the group of representatives from an investment bank whose main responsibility is to complete the ... Read Full Answer >>
  4. When did Facebook go public?

    Facebook, Inc. (NASDAQ: FB) went public with its initial public offering (IPO) on May 18, 2012. With a peak market capitalization ... Read Full Answer >>
  5. Can mutual funds invest in IPOs?

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