Inititial Public Offerings TEAM A
Initial Public Offerings: Team A
Christopher Lee, Jonathon Meisterling, Kerri Foster, Kevin Therriault,
Rebekah Brown & Tim Huddleston
FIN/370
December 8, 2014
Matthew Tanzer
Initial Public Offerings
In the business world, companies are always looking for ways to make more money in order to expand. There are many different ways to go about this, all of which come with a certain amount of risk. One of the more common methods is for a company to issue an initial public offering. While there is risk involved as well as a lot of hard work, the advantages can be too good to pass up.
The role of the investment banker and underwriter
When a company wants to issue its first sale of stock to the public, an initial public offering, it will hire an underwriter. Because an IPO means that this is the company’s first introduction into the public business world, there is a substantial amount of risk. The underwriter is hired to manage those risks. An underwriter is usually an investment bank that employs IPO specialists. They ensure that the company has met all regulatory requirements, and they provide all mandatory financial data is made available to the public. They seek out and identify significant prospective buyers of stock, and then recommend an IPO price to the firm. This determines the price the shares will be sold at (Ozyasar, 2014). The underwriter will usually provide a guarantee to the business to sell a specific amount of stock, and if it fails, then it agrees to buy the stock itself. This ensures that the underwriter will work diligently to sell the stock it commits to selling, and if it does not and has to buy the shares itself, it will then sell the shares on the open market (Ozyasar, 2014). This risk means that the underwriters will do all they can to help ensure that the stocks get sold on the open market.
The role of an originating house and a syndicate
Investment banks that form a group to perform underwriting services are known as a
Christopher Lee, Jonathon Meisterling, Kerri Foster, Kevin Therriault,
Rebekah Brown & Tim Huddleston
FIN/370
December 8, 2014
Matthew Tanzer
Initial Public Offerings
In the business world, companies are always looking for ways to make more money in order to expand. There are many different ways to go about this, all of which come with a certain amount of risk. One of the more common methods is for a company to issue an initial public offering. While there is risk involved as well as a lot of hard work, the advantages can be too good to pass up.
The role of the investment banker and underwriter
When a company wants to issue its first sale of stock to the public, an initial public offering, it will hire an underwriter. Because an IPO means that this is the company’s first introduction into the public business world, there is a substantial amount of risk. The underwriter is hired to manage those risks. An underwriter is usually an investment bank that employs IPO specialists. They ensure that the company has met all regulatory requirements, and they provide all mandatory financial data is made available to the public. They seek out and identify significant prospective buyers of stock, and then recommend an IPO price to the firm. This determines the price the shares will be sold at (Ozyasar, 2014). The underwriter will usually provide a guarantee to the business to sell a specific amount of stock, and if it fails, then it agrees to buy the stock itself. This ensures that the underwriter will work diligently to sell the stock it commits to selling, and if it does not and has to buy the shares itself, it will then sell the shares on the open market (Ozyasar, 2014). This risk means that the underwriters will do all they can to help ensure that the stocks get sold on the open market.
The role of an originating house and a syndicate
Investment banks that form a group to perform underwriting services are known as a
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