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.

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RELATED FAQS
  1. What is the difference between a prospectus and summary prospectus?

    Learn about the differences between the summary prospectus and statutory, or full, prospectus, and discover what mutual fund ... Read Answer >>
  2. How can I get a mutual fund prospectus?

    Read and understand the prospectus before investing in a mutual fund. You can obtain a copy from the fund company, your financial ... Read Answer >>
  3. What does the underwriter do in a new stock offering?

    Learn the role an underwriter plays for an initial public offering, and the steps an underwriter takes in preparing for an ... Read Answer >>
  4. What is the most important section in an investment company's prospectus?

    Learn about the various elements included in an investment company's prospectus and which ones are most important for investors ... Read Answer >>
  5. How can I get a free mutual fund prospectus?

    Obtain a free copy of a mutual fund prospectus from the dealer or use one of these online resources to download an electronic ... Read Answer >>
  6. Do underwriters make guarantees to sell an entire IPO issue?

    Underwriters represent the group of representatives from an investment bank whose main responsibility is to complete the ... Read Answer >>
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