I test my bath before I sit
And am always moved to wonderment
That what chills the finger not a bit
Is so cold upon the fundament
- Ogden Nash
It is natural to want to put a toe in the water to test the
temperature before plunging in, to avoid the shock of an
unexpectedly cold reception. For the same reason, it is natural for
a company to want to "test the waters" of the capital
markets to see how well its securities would be received by
investors before going through the time, expense and scrutiny of a
public offering of securities, especially for an initial public
offering by a company that is not already subject to public company
reporting requirements.
Traditionally, securities laws in the United States and Canada
have made it difficult to test the waters before a public offering.
Meetings with prospective investors to discuss their possible
interest in a securities offering could be viewed as unlawful
offers of the security or as acts in furtherance
