The Rise of Accelerated Seasoned Equity Offerings
2008, Journal of Applied Corporate Finance
Scott B. Smart, William Megginson, Bernardo Bortolotti
Seasoned equity offerings (SEOs) executed through accelerated underwritings have increased global market share recently, and now account for a majority of U.S. and European SEO proceeds. We examine 31,242 SEOs, executed during 1991-2004, which raise over $2.9 trillion. Compared to fully marketed deals, accelerated offerings occur more rapidly, raise more money, and require fewer underwriters. These deals typically involve large firms selling primary and secondary shares, whereas in traditional SEOs primary shares dominate. Accelerated deals reduce issuance costs by about 250 basis points, with announcement period returns comparable to traditional offerings. This rapid shift toward accelerated underwriting suggests the maturing of a superior SEO issuance technology.
Smart, Scott, William Megginson, and Bernardo Bortolotti (2008), "The Rise of Accelerated Seasoned Equity Offerings," Journal of Applied Corporate Finance, Vol. 20, No. 3, Summer, pp. 35-57.