What do underwriters risk in a bought deal follow-on offering compared to a marketed offering?

In a bought deal follow-on offering, the underwriter commits to purchasing the entire offering from the issuer, which means they take on the full risk of selling the shares to investors afterwards. This approach allows the issuer to secure immediate funding, but it also means that the underwriter is exposed to the risk of market fluctuations. If the market conditions change unfavorably, the underwriter might find it difficult to sell the shares at the originally anticipated price, leading to potential losses. This contrasts with a marketed offering, where the underwriter has more flexibility to gauge market demand before the sale, reducing the risk of not achieving the expected price.

The other options focus on different aspects of the underwriter's role:

• Losing potential asset value without prior approval relates more to how deals are structured rather than the risks inherent in the selling process.

• Agreeing to more stringent regulations is not specifically a factor differentiating bought deals from marketed offerings, as regulations can vary based on multiple factors unrelated to the type of offering.

• Being unable to participate in future offerings does not directly stem from the risk profile of bought deals compared to marketed offerings; this factor pertains more to overall underwriter relations or reputational risks rather than immediate financial risks in a specific offering context.