Lead Underwriter Law and Legal Definition

Lead underwriter is an investment bank or other financial company that has the primary directive for organizing an initial public stock offering, or a secondary offering for companies that are already publicly traded.

When a company wants to raise capital by selling securities to investors, it partners with an investment bank, known as the lead underwriter. That bank has the primary responsibility for organizing and managing an initial public offering (IPO), a secondary stock offering, or a bond offering.

In the case of an IPO, the lead underwriter agrees to buy some or all the shares from the company and helps it determine an initial offering price for the security, create a prospectus, and organize a syndicate of other investment banks to help sell the securities to investors.

In return for assuming the financial risk of the IPO, the lead underwriter receives a fee, which is usually a percentage of the price of each share of the IPO. Lead underwriters are also called syndicate manager, lead manager, managing underwriter.