Function 2: Underwriting, Financing, M&A and Tender Offers (43% Exam Weight)

Series 79 — Function 2: Underwriting, Financing, M&A and Tender Offers

Master the Series 79 — Function 2: Underwriting, Financing, M&A and Tender Offers function of the Series 79 (Investment Banking Representative) exam with official regulatory rules, quantitative formulas, and targeted practice drills.

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Authoritative Series 79 Study Notes

Key Concepts & Regulatory Highlights

Covers public equity and debt underwriting (Securities Act of 1933, WKSI automatic shelf registration, Free Writing Prospectuses), private placements (Reg D, Rule 144A, Reg S), M&A execution, fairness opinions (FINRA Rule 5150), tender offers (Williams Act / SEC Rules 14e-1 & 14e-2), and Chapter 11 bankruptcy restructuring (Section 363 stalking horse auctions).

📐 Essential Calculation Formulas

WKSI Qualification Thresholds (SEC Rule 405)

>= $700M Public Equity Float OR >= $1B Registered Debt (Past 3 Years)

Unlocks Form S-3ASR automatic shelf registration and pre-filing Free Writing Prospectuses.

Williams Act Tender Offer Timelines

20 Business Days Minimum Open | 10 Business Days Extension & Schedule 14D-9

All tendering shareholders must receive the highest consideration paid to any other holder (Best Price Rule 14d-10).

📜 Core Regulatory Rules & Requirements

✓Well-Known Seasoned Issuer (WKSI — SEC Rule 405): Requires >= $700M in worldwide public common equity float held by non-affiliates OR >= $1B in registered non-convertible debt issued over the prior 3 years. WKSIs can file automatic shelf registrations (Form S-3ASR) effective immediately upon filing.

✓FINRA Rule 5150 (Fairness Opinions): Requires disclosing in any proxy/public fairness opinion whether the firm received contingent success fees, whether material relationships existed in the past 2 years, whether management projections were independently verified, and whether a fairness committee approved the opinion.

✓Tender Offer Timelines (SEC Rules 14e-1 & 14e-2): A tender offer must remain open for at least 20 business days from commencement, and must be extended for at least 10 business days after any change in offer price or share percentage sought. The target board must file Schedule 14D-9 within 10 business days of commencement.

✓Section 363 Bankruptcy Sales & Chapter 11 Cram-Down: In a Section 363 asset sale, a 'stalking horse' bidder sets the floor price in exchange for court-approved break-up fees and expense reimbursement. Chapter 11 reorganization plans require approval by >1/2 in number and >=2/3 in dollar amount of voting claims in an impaired class.

💡 High-Yield Exam Watchouts

•Remember the Chapter 11 voting threshold for an impaired class of creditors: more than 50% in NUMBER of voting creditors AND at least 2/3 (66.67%) in DOLLAR amount of claims!
•Under SEC Rule 14e-3, trading on material non-public information regarding an impending tender offer is strictly prohibited regardless of fiduciary duty.

Why Study Series 79 — Function 2: Underwriting, Financing, M&A and Tender Offers?

The Series 79 — Function 2: Underwriting, Financing, M&A and Tender Offers portion of the Investment Banking Representative (Series 79) exam is critical for passing on your first attempt. Understanding these concepts builds both test-day precision and practical regulatory fluency.

Our practice questions and formulas are engineered to mirror the official Series 79 blueprint and statutory complexity you'll encounter at Prometric.

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