Underwriting Corporate Securities
Once a business has decided that it needs to raise capital to meet its organizational objectives, they must determine how to raise the needed capital. Most corporations at this point will hire an investment banker, also known as an underwriter, to advise them. The underwriter works for the issuer and it is their job to advise the client about what type of securities to offer. The issuer and the underwriter together determine whether stocks or bonds should be issued and what the terms will be. The underwriter is responsible for trying to obtain the financing at the best possible terms for the issuer. The underwriter will:
- Market the issue to investors
- Assist in the determination of the terms of the offering
- Purchase the securities directly from the issuer to resell to investors
The issuer is responsible for:
- Filing a registration statement with the SEC
- Registering the securities in the states in which it will be sold, also known as blueskying the issue
- Negotiating the underwriter’s compensation and obligations to the issuer
Related Articles
-
Insurance
What is Underwriting?
Underwriting is a term most often used in investment banking, insurance and commercial banking. Generally, underwriting means receiving a remuneration for the willingness to pay for or incur ... -
Insurance
Is Insurance Underwriting Right For You?
If you have excellent analytical skills and an eye for detail, this may be your calling. -
Insurance
What Prequalification and Underwriting Do
Learn now prequalification and underwriting can help you buy the policy that best meets your needs. -
Personal Finance
What do investment bankers really do?
Investment bankers are essentially corporate financial advisors who help companies manage the process of raising financing for their activities. Check out more on their roles in banking industry. -
Investing
Basics Of Federal Bond Issues
Treasuries are considered the safest investments, but they should still be analyzed when issued. -
Investing
What's the Role of an Investment Bank?
Investment banks provide financial advice to businesses and governments and help them raise capital through the sale of stocks, bonds and other products. -
Insurance
IPO Flippers And The Companies Who Hate Them (TWTR, ETSY)
Learn how flipping activity affects an initial public offering. -
Small Business
How Effective Is The Chinese Wall?
Because underwriters work on one side of the Chinese wall and analysts work on the other side, information gathered by the underwriters is not supposed to be shared with analysts.