What Does an Underwriter Do?
The principal role of the underwriter is to sell securities to the public. The underwriter also plays a significant role in advising management on financing opportunities, structuring the transaction and determining the proper timing of the offering. The choice of underwriter is important because the investment bankers who perform these services vary widely in quality, cost and range of services provided.

A company usually selects one underwriter to serve as the managing or lead underwriter for its offering. The managing underwriter will usually form a syndicate of other investment banking firms that act as a group to sell the securities.

Because an investment banking firm must invest considerable time in discussions and investigations before it decides to underwrite an IPO, you should exercise care when initially contacting investment bankers. One of the worst mistakes that a company can make is keeping secrets from its investment banker. The chemistry between you and the investment banker is very important.

A company should conduct its own investigation of potential underwriters by having discussions with other companies that have recently gone public, reviewing prospectuses of other initial public offerings in the same industry and by asking for recommendations from its accountants, bankers and attorneys.

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