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Best Efforts Underwriting Meaning & Definition

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Definition of Best Efforts Underwriting

Best Efforts Underwriting is a type of underwriting that does not guarantee the issuer that any of their securities will be sold.

Applying "Best Efforts Underwriting" to Securities Exams:

When a company who is issuing securities to the public the company must hire an underwriter to sell the securities to the investing public. For issues that are not in high demand the underwriters may only be willing offer the securities for sale on a best efforts basis. The underwriters will do their best to sell the securities to investors but will not guarantee that they will be able to sell the securities and will not put their capital at risk.

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