At-the-market (“ATM”) equity offerings have become an increasingly important financing tool for public companies heading into 2026. Once used primarily by REITs, ATM programs are now being adopted across a broad range of industries as companies seek greater flexibility, lower transaction costs, and reduced market disruption when accessing equity capital. An ATM may be most desirable where a steady flow of working capital is the objective, as opposed to a single big raise for a capital project.
ATM programs allow issuers to raise capital opportunistically while retaining significant control over timing and pricing. Traditional underwritten follow-on offerings remain less prevalent than in earlier cycles, in part because ATM programs allow issuers to raise capital more opportunistically and often at a lower overall cost than fully marketed transactions.
What Is an At-The-Market Offering?
An ATM offering is a registered equity distribution program that allows a public company to sell shares directly into the existing trading market at prices based on prevailing market conditions. Sales are conducted pursuant to an equity distribution agreement between the issuer and one or more broker-dealers acting as sales agents.
Key structural features typically include:
- Sales at market prices rather than at a fixed or negotiated offering price;
- Incremental sales over time, at the issuer’s discretion;
- Reliance on an effective shelf registration statement, commonly on Form S-3; and
- A negotiated equity distribution agreement governing commissions, mechanics, and reporting.
Unlike traditional underwritten offerings, ATM programs are not single-event financings. Instead, they establish a framework that allows issuers to access capital over time when conditions are favorable.
Strategic Advantages of ATM Programs
Flexibility in Timing and Amount
ATM programs allow issuers to raise capital as needed, enabling management teams to respond to favorable trading conditions or specific funding requirements while managing dilution more precisely.
Reduced Market Impact and Lower Transaction Costs
Because shares are sold into the market incrementally and at prevailing prices, ATM sales often exert less downward pressure on stock price than large block offerings priced at a discount. Distribution costs are also typically lower than those associated with fully underwritten offerings.
Limited Management Disruption
ATM programs generally do not require roadshows or extensive investor marketing, allowing management teams to focus on operations rather than transaction execution. The other side of this factor, however, is that unlike traditional follow-on offerings, ATMs may fail to attract new institutional investors or analyst coverage because there is no road show or dedicated promotional effort.
Ongoing Access to Equity Capital
Once established, an ATM program can remain in place for multiple quarters or longer, subject to disclosure updates and shelf capacity, providing issuers with recurring access to public equity markets.
Forward Sale Option
A recent trend in ATM offerings is the incorporation of a forward sale option. A forward sale allows an issuer to sell its securities through the ATM offering at the current trading price without actually issuing any securities to satisfy the forward commitment until a future settlement date.
Practical Considerations and Limitations
Liquidity and Dilution Constraints
ATM programs are most effective for issuers with sufficient public float and trading volume. Where an issuer’s market is too thin, an ATM may cause share price decline due to increased selling pressure that a low liquidity market cannot absorb. Market requirements for a successful ATM are the province of placement agents and investment banks that handle these offerings.
Companies with limited liquidity may find that the pace and size of sales are constrained, reducing the practical utility of the program. Another side effect to be discussed before undertaking an ATM is whether institutional investors will shy away, fearing that the issuer will continue to sell shares into the market over time, preventing any upward price movement.
Ongoing Compliance and Disclosure Requirements
Because an ATM constitutes an active registered offering, issuers must maintain a current and effective shelf registration statement and update offering materials in connection with periodic reporting. Shares sold under the program must be disclosed in Forms 10-Q and 10-K and, in some cases, on Form 8-K.
No Guaranteed Capital Raise
ATM programs provide flexibility, not certainty. Issuers should not compel sales if market conditions are unfavorable, and there is no assurance that the full authorized amount will be raised within a particular timeframe.
Administrative and Coordination Demands
While less complex than fully underwritten offerings, ATM programs still require coordination among legal, finance, accounting, and broker-dealer/placement agent(s) teams, including ongoing monitoring of sales activity and compliance obligations. In particular, placement agents.
For example, at the start of an ATM program, placement agents will typically request legal opinions and auditors’ comfort letters, and they may require due diligence bring-downs in connection with each annual and quarterly filing. The level of ongoing due diligence/timing of bring-down procedures requested by a placement agent may present a challenge to the issuer’s financial reporting department and outside auditor.
Securities Law and Disclosure Considerations
Key legal and regulatory considerations include:
- Shelf Registration: An effective shelf registration statement covering ATM sales must be maintained, with disclosures tailored to at-the-market distributions.
- Equity Distribution Agreement: The sales agreement governs pricing parameters, issuer discretion, commission structure, and reporting mechanics.
- Exchange Rules: Issuers must comply with applicable NYSE or Nasdaq listing standards, including shareholder approval thresholds where applicable.
- Periodic and Current Reporting: ATM sales must be appropriately disclosed in periodic and current reports to ensure transparency and compliance with anti-fraud provisions.
- Regulation M may impose constraints: Regulation M prohibits stabilization and passive market making activities by the issuer or broker-dealers. The Issuer will need to determine whether the ATM constitutes a “distribution” under Regulation M. If it does, the broker dealer’s ability to issue research reports or engage in market making activities will be significantly limited.
- ATM offerings may have to be paused during an issuer’s periodic and event-specific blackout periods.
Guidance for Boards and Management
Boards and management teams considering an ATM program should:
- Evaluate Capital Strategy Holistically: Assess whether an ATM aligns with the company’s capital need, financing objectives and balance-sheet strategy.
- Coordinate Disclosure and Investor Messaging: Ensure prospectus materials and public disclosures clearly explain the rationale for the program and management’s intended approach to equity issuance.
- Implement Appropriate Controls: Establish procedures to manage material nonpublic information and ensure sales occur only during appropriate trading windows.
- Monitor Market and Investor Perception: Given the visibility of ATM programs, investor relations teams should be prepared to address questions regarding dilution, timing, and use of proceeds.
Conclusion
The increased prevalence of ATM offerings reflects both improved market conditions and issuer demand for flexibility in accessing equity capital. When thoughtfully structured and carefully managed, ATM programs can provide efficient access to public markets with reduced cost and disruption. At the same time, they require disciplined legal planning, robust disclosure practices, and ongoing oversight.