What is a 'Book Runner'
The book runner is the main underwriter or lead manager in the issuance of new equity, debt or securities instruments, and in investment banking, the book runner is the underwriting firm that runs, or who is in charge of, the books. A large, leveraged buyout could involve multiple businesses, and the book runner, representing one of the participating businesses, coordinates with the other participating firms. Typically, one company takes the responsibility of running or handling the books, though more than one book runner can manage a security issuance, with the involved parties being referred to as joint book runners.
BREAKING DOWN 'Book Runner'In investment banking, a syndicate is comprised of a group of underwriters who are responsible for placing a new equity, debt or security issue with investors. The book runner syndicates with other underwriting firms in order to reduce its risk in the issuance of the new equity, debt or security. Also called managing underwriter or syndicate manager, the book runner is listed first among the other underwriters participating in the issuance and typically assigns parts of the new issue to other underwriting firms for placement while keeping the largest part for himself.
An underwriter is generally a representative of a particular business entity, most often an investment bank, who works with corporations regarding the creation and issuing of public offerings. Underwriters work to ensure that all documentation and reporting requirements are met, as well as working with potential investors to market the upcoming offering and gauge interest. An underwriting institution may also offer guarantees regarding the amount of stock that will be purchased and assume the responsibility to purchase the number of securities required to meet the minimum guarantee.
A book runner performs the same duties as an underwriter while also coordinating the efforts of multiple involved parties and information sources. In this regard, the book runner functions as a central point for all information regarding the potential offering or issue. This may allow for the book runner and his associated firm to be privy to new information prior to it being widely known.
Book Creation for IPOs
One responsibility of the book runner is to create a book by creating a functional list for tracking information regarding parties interested in participating in the new offering or issue. This information is used to help determine opening prices for Initial Public Offerings (IPOs) as well as to gain insight into the level of interest expressed by potential investors.