Distributing Syndicate


DEFINITION of 'Distributing Syndicate'

A group of investment banks that work to underwrite and sell an initial public offering (IPO) of securities to the market. Investment banks often form syndicates when working on large securities offerings to reduce risk and to increase the potential network of contacts through which to sell the securities. This is especially true in the case of firm commitment offerings, where the distributing syndicate may suffer considerable losses if the full offering cannot be sold.

BREAKING DOWN 'Distributing Syndicate'

Distributing syndicates are of particular importance to small investment banks. Smaller "boutique" banks would be unable to underwrite many IPOs because they lack the capacity to sell large offerings alone. Further, a boutique bank would only be able to work on one or two offerings at a time. Banding together as part of a syndicate allows boutique banks to work on several offerings simultaneously, take on larger offerings and more effectively compete with large investment banks.

  1. Red Herring

    A preliminary prospectus filed by a company with the Securities ...
  2. Due Diligence Meeting

    The process of careful investigation by an underwriter to ensure ...
  3. Firm Commitment

    1. A lending institution's promise to enter into a loan agreement ...
  4. Underwriter

    An underwriter is a company or other entity that administers ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  6. Best Efforts

    An agreement in which an underwriter promises to make a full-fledged ...
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