Confidentially Marketed Public Offerings (CMPOs)

In a confidentially marketed public offering, commonly known as a CMPO, typically an underwriter markets a proposed offering of a public company’s shares on a confidential basis to a select group of wall-crossed institutional investors before the offering is broadly marketed to the public. The issuer in a CMPOs must have an effective Form S-3 registration statement on file to effect this “takedown” from the shelf. The offering is most often a firm commitment underwriting of shares that are registered under the Securities Act of 1933 and freely tradeable. A CMPO can be conducted on a short timetable, making it an appealing choice for fundraising in volatile markets.


  • Short timeframe – CMPOs can be completed more quickly than traditional firm commitment offerings.
  • Confidential marketing – CMPO can be commenced confidentially and marketed to wall-crossed investors without disrupting the market before the offering is priced. This allows issuers the opportunity to test the market confidentially and to withdraw the offering if pricing terms aren’t attractive without public disclosure.
  • More attractive pricing – Depending on market conditions, there is less of a discount to market price than non-public offerings because the shares are freely tradeable.
  • Broader distribution – Retail investors can participate in CMPOs, potentially widening the issuer’s stockholder base.
  • Avoid stockholder approval requirements – If structured properly, a CMPO should not be subject to stockholder approval under the listing standards of the NYSE and Nasdaq for certain non-public offerings.
  • Underwritten offering – An underwritten offering can be perceived as providing better pricing, and the underwriter may stabilize or purchase an over-allotment, which may be more favorable to the issuer than if the same number of shares was sold in a non-underwritten offering.


  • Must be Form S-3 eligible – Not available to issuers that are not eligible to use Form S-3.
  • Compliance with “Baby Shelf” rules – Issuers with a non-affiliate market cap of less than $75 million must limit the size of all offerings over a rolling 12-month period to one-third of their current public float. This ceiling may make this option less appealing for small-cap or micro-cap issuers.
  • Limited marketing period – Because the underwriter must bring institutional investors “over the wall” to confidentially market the offering to them, the potential investor must sign a confidentiality and standstill agreement. Wall-crossed investors are not willing to limit their own actions indefinitely, limiting the time the underwriter has to market the offering.
  • Risk of MNPI – If the marketing period is not successful or market conditions change during the confidential marketing period, the offering would never “flip” to public by the issuer announcing the offering. In that scenario, an institutional investor may insist on the issuer publishing a cleansing press release to ensure that the investor is not in possession of material, non-public information about the issuer so that it may trade in the issuer’s securities.
  • Management involvement – Key members of the issuer’s management team are typically involved in the marketing efforts and calls with institutional investors, which may distract them from the day-to-day operations of the issuer’s business.

Before structuring and conducting a confidentially marketed public offering, a company should consider:

  • Public distribution of the issuer’s shares
    • If not properly structured as a public offering, the offering could trigger a stockholder vote before any shares could be issued in the CMPO.
    • To determine whether the CMPO is sufficiently public, the NYSE and Nasdaq will look at the number of investors who are offered securities and the breadth of the marketing outreach completed during the offering. A retail component is highly encouraged to demonstrate the breadth of the public distribution.
  • Baby Shelf Rules
    • Issuers subject to the “Baby Shelf” rules are not permitted to sell more than one-third of their non-affiliate market cap during any trailing 12-month period.
    • This capacity is re-measured before any potential shelf offering and can fluctuate based on the market price of the issuer’s shares and the issuer’s affiliates’ holdings.
  • Avoid Regulation FD violations and potential insider trading
    • The confidential marketing period must be completed under strict and well-established wall-crossing procedures to avoid (1) the issuer selectively distributing material information and violating Regulation FD and (2) any investor having and trading on material, non-public information about the issuer.

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