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Definition of 'Lead Underwriter'
A investment bank or other financial outfit that has the primary directive for organizing an initial public stock offering, or a secondary offering for companies that are already publicly traded. The lead underwriter will usually work with other investment banks to establish a syndicate, and thereby create the initial sales force for the shares. These shares will then be sold to institutional and retail clients.
The lead underwriter will assess the company financials and current market conditions to arrive at the initial value and quantity of shares to be sold. These shares carry a hefty sales commission (as much as 6-8%) for the underwriting syndicate, with the majority of shares being held by the lead underwriter.
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Investopedia explains 'Lead Underwriter'
Being the lead underwriter for a stock offering, especially an initial public offering (IPO), can bring a large payday if the market shows high demand for the shares. Often the stock issuer will allow the lead underwriter to create an over-allotment of shares if demand is high, which can bring in even more money to the underwriting firm. There are substantial risks involved in underwriting stock offerings - any one company could plummet in the open market once public trading begins. This is why the large investment banks, such as Merrill Lynch, Morgan Stanley, Goldman Sachs, Lehman Brothers and others will look to conduct many diverse offerings in the course of a year.
One or two great stock offerings a year can be enough to meet company earnings targets, but market conditions as a whole will determine the relative amount of profit the investment banks can earn. In the zooming market phase of the late-1990s, investment banks were making money hand over fist as eager investors gobbled up any new shares that came to market, and traded them much higher once on the exchange. However, when the market collapsed in late-2000, the underwriting community went into hibernation mode, advising even the best private companies to "wait out the storm" before going public.
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Search results for 'Lead Underwriter'
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http://www.investopedia.com/exam-guide/series-7/securities-markets/primary-bond-market.asp
... Negotiated sale: Before the public sale date, the issuer selects the lead
underwriter who in turn manages the financing. The issuer's ...
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http://www.investopedia.com/exam-guide/series-7/securities-markets/secondary-shelf-distribution.asp
... management fee paid to the lead underwriter. The underwriter's and management
fee are known collectively as the gross spread. Selling ...
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http://www.investopedia.com/exam-guide/series-7/securities-markets/registration.asp
... During the due diligence process, the syndicate is also being formed. The lead
underwriter, or manager, invites other investment banks to participate. ...
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http://www.investopedia.com/articles/08/investment-banks.asp
... The role of the financial firm was that of underwriter - representing the issuer
to ... of an Offering A company selects an investment bank to be lead manager of a ...
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http://www.investopedia.com/articles/00/100300.asp
... On the other hand, your research may lead to the discovery that a company's prospects ...
with strong brokers Try to select a company that has a strong underwriter ...
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http://www.investopedia.com/articles/financial-theory/11/role-of-rebalancing.asp
... hand, a rebalancing discipline reinforces good behavior and should lead to far ... of
Virginia, and designations as Chartered Life Underwriter (CLU), Accredited ...
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http://www.investopedia.com/articles/stocks/11/beware-wall-street-three-lies.asp
... There are plenty of folks out there that will help lead you astray ... the University
of Virginia, and designations as Chartered Life Underwriter (CLU), Accredited ...
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http://www.investopedia.com/articles/financialcareers/09/estate-planning-certifications.asp
... law as an Attorney (Atty) or to practice as a Certified Public Accountant (CPA),
or be currently designated as a Chartered Life Underwriter (CLU), Chartered ...
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http://www.investopedia.com/articles/economics/09/lessons-worlds-biggest-bankruptcies.asp
... In that year, Lehman was the leading underwriter of mortgage-backed securities on ...
literally in the driver's seat for decades, but squandered its lead by virtue ...
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http://www.investopedia.com/articles/retirement/07/sandwich-boomer.asp
... to neglect their own health, and the stress and worry can lead to depression ... David
Rando. David Rando is an attorney, chartered life underwriter and chartered ...
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