An all or none underwriting is a type of underwriting that states that the issuer wants to sell all of the securities being offered or none of the securities being offered. The proceeds from the issue will be held in escrow until all securities are sold.
Applying "All or None Underwriting" to Securities Exams:
An issue may need a certain amount of money to meet a specific objective such as building a new plant. If the issue cannot raise all of the money it needs to build the new plant, it does not want or need to raise the money. With an all-or-none (AON) underwriting, the issuer has determined that it must receive the proceeds from the sale of all of the securities. Investors’ funds are held in escrow until all of the securities are sold. If all of the securities are sold, the proceeds will be released to the issuer. If all of the securities are not sold, the issue is canceled, and the investors’ funds will be returned. Contingent offerings must have a qualified financial institution (QFI) to act as an escrow agent for the offering. A general securities broker dealer, bank, or trust company may act as an escrow agent.