Essay On Finance

The public Initial Offering or IPO as it majorly known, is a process whereby companies goes from being private to public and at the same time sell stock shares in their firm (Brau, 2011). If a firm wants to sell part of their shares to the public, it often conducts an Initial Public Offering and through that, the company status changes from private to public. This aspect implies that the company now has general shareholders. Initial Public Offering often takes approximately four months from the beginning to first day trading on an exchange (Brau, 2011). The main aim is usually to raise funds and obtain more liquidity by selling shares publicly.
During an IPO process, the role of the investment banker is to search and find investors who are willing to buy or purchase the securities that the firm tends to place on the public market. In addition, it will help the firm in preparing the prospectus; which includes writing the prospectus and collaborating with other constituent’s parties within the firm to ensure the prepared prospectus complies with the law. The underwriter often acts as the investment banks that employ the IPO specialist (Brau, 2011). The underwriters main role is to ensure that the company satisfies all the regulatory requirements such as making sure all the mandatory financial data are available to the public. In addition, they often assume the role of distributing the securities issue to the general public.
The originating house has the role of managing the underwriting and is involved in the sale of the new issue of stock to the general public (Brau, 2011). On the other hand, a syndicate refers to a group of other investment bankers whose main role in an IPO process is to help buy and resell the issue. Furthermore, they are involved in completing the underwriting and marketing of the securities.

Reference

Brau, J. C., & Fawcett, S. E. (2011). Initial public offerings: An analysis of theory and practice. The Journal of Finance, 61(1), 399-436.