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LogoutWhen a business prepares to undertake an initial public offering (IPO) of stock or bonds, it delegates marketing responsibilities to one or more underwriters. These are the financial firms in charge of overseeing the IPO process from start to finish, including setting a price for the shares and selling them. Large financial institutions and brokerage firms are among the initial buyers.
One underwriter may be responsible for placing 15% of an issue in an undivided or eastern account, while others handle the remainder. If the whole issue is not placed, the 15% company must help in the placement of the remaining issues. In a western account, each underwriter is solely responsible for placing the percentage of shares allotted to them. The underwriters’ share of the liability is divided based on the size of their allotment of the total shares available.