Structuring the Forward Sale of Securities: Capitalizing on Market Conditions, Flexibility in Future Investments

A live 90-minute premium CLE webinar with interactive Q&A

Thursday, March 19, 2020

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, February 21, 2020

or call 1-800-926-7926

This CLE webinar will provide corporate finance counsel with the tools to structure a forward sale of securities in connection with an IPO. The panel will discuss the different methods of settlement, the tax benefits of a sale, and the particular benefits for REITs, which may use forward sales to fund investments when needed.


A forward sale of common shares is an offering that is agreed upon today with a settlement date in the future. The delayed issuance provides flexibility to the issuer without "drag on" performance measures or shareholders incurring immediate economic dilution. These agreements are typical in funding transactions where the timing of the closing or capital need is uncertain. Counsel looking to take advantage of a forward sale should have a thorough grasp of the securities requirements and tax implications.

A forward-sale transaction may be structured as part of a public offering registered with the SEC. If not paired with a simultaneous primary issuance by the issuer, the company will not issue any shares at the time of closing. Instead, the forward purchasers in the transaction go into the market and borrow shares that will be delivered to purchasers in connection with the registered public offering.

Forward sales can be particularly beneficial from a tax perspective. For example, REITs will not recognize any nonqualifying gross income under a forward sale agreement. Where the REIT physically issues shares to the underwriter to settle the forward, no gain or loss will be recognized under Section 1032 of the Code, as no gain or loss is recognized on a corporation's issuance of stock in exchange for cash or property.

Listen as our authoritative panel examines the nuances of forward-sale agreements in connection with the issuance of securities. The panel discussion will include the methods of settlement a forward purchaser may use to close out its borrowing position.



  1. Reasons for using forward-sale agreements
    1. Locking in price
    2. Flexibility to employ capital when needed
  2. Securities framework: use of a forward-purchase agreement in connection with an IPO
  3. Key terms
  4. Tax issues


The panel will review these and other key issues:

  • What are the pricing and operational advantages of a forward sale as opposed to an immediate sale of securities?
  • What are the key terms of a forward-sale agreement?
  • How are forward sales treated under the tax code?
  • What are the different options for closing the purchase of securities under a forward-sale agreement?


Servidio, John
John Servidio

Goodwin Procter

Mr. Servidio is a partner in Goodwin’s Capital Markets and Digital Currency & Blockchain Technology...  |  Read More

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