Selecting your Underwriter

If your company is considered to be a promising public offering, you may not have to look very far to find an investment banker. In fact, the investment banking firms may be lining up at your door, hoping to be selected to manage your IPO. Naturally, you will want to pick the firm that you believe has the skill and experience to raise the most money for your company.

The firm you select will be called the “underwriter” of the IPO. As the underwriter, the investment banker usually buys all the shares of stock you are offering through the IPO.  Then they go out and sell the shares at a slightly higher price — usually about 7% higher. In this way, the investment banker or underwriter shares in the success (or failure) of the IPO.   The investment bank has a huge incentive to work very hard to help make your IPO the best ever.

However, the investment bank doesn’t do all the work alone. Who else is on the IPO team with you and the investment banker?

• People from your company assigned to work on the IPO
• Lawyers for your company and the investment banker
• Auditors and accountants
• Public relations specialists
• Others — a printing firm, a transfer agent, and a bank note company

To learn more the IPO team members, follow this link: http://www.inc.com/articles/1999/11/15746.html.  To help you glean the most important points from this resource, we have prepared a note sheet on Key Players on the IPO Team. Click the link below to download this note sheet. If you are taking this course for a grade or for credit, you will turn in this assignment to your advisor or teacher.

Worksheet 8: Notes on Key Players on the IPO Team

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