A pre-prospectus statement of financial condition that is sent to a limited group of potential underwriters and institutional investors prior to a securities or IPO filing. The goal of a pathfinder prospectus is to create demand and eventually set the price for the offering, as well as to clear up any inconsistencies in the company's published financial statements.



Taobiz explains Pathfinder Prospectus
The pathfinder prospectus will contain almost all of the same information as an IPO prospectus except for the price of the shares, which will be set once underwriters get a feel for the overall demand. If demand is high enough, the underwriter syndicate will most often use its over-allotment right to issue extra shares, providing added profit to the investment banks and more financing to the company.