In initial public offering or IPO, where a private company transforms into a public company, bookrunners are vital. And here's why.
Bookrunners and Why They Are Important
Bookrunners serve as the underwriters or managers in investment banking. From the word itself, it 'runs' or is in-charge of the books. They are important in any IPO transaction because they are the ones responsible for placing a new equity, debt or security issue with investors. The bookrunner may work with other participating firms.
Usually, one company will be responsible of handling the books, and the bookrunner will be listed on top of other underwriters. More than one bookrunner may manage a security issuance, and this is referred to as "joint book runners". Bookrunners, when syndicated with other firms, can reduce the risk in the issuance of the new equity, debt or security.
Bookrunners are important in rendering a successful IPO transaction. Every private company with an endeavor to go public shall be mindful on how to choose the right underwriting firms that will be in charge of its IPO. Here are some tips for you on selecting efficient bookrunners.
The More, The Better
Use more than one bookrunner. With joint bookrunners and underwriters, there is a greater probability to improve in a well-rounded manner. Your company will be reinforced in various attributes such as knowledge in the industry, experiences in deals and negotiations, and other buy-side and other business-related relationships and concerns.
Expand Your Array of Options
Of course, you should have a targeted group of investment banks and underwriters to consider for leading you IPO endeavors. Nevertheless, there is no harm in being open for more options. Remember, the more options you have, the greater the chance you can settle for the best partner for your company. It may take more time and meticulous efforts, but it will definitely pay off once you have found the right underwriting firm/s.
Take It as a Marriage
When looking for the right bookrunner, find your soulmate. Remember that your partnership is a marriage so your company and the bookrunner must be compatible. This means that you should be sharing a common vision. You should be both working in the same direction, towards the same destination.
Partner With A Researcher
You can easily find an investment banker, but not a researcher, and when you find one never ever let go. Research analysts are very important for a private company's IPO process. When the IPO transaction is done, they will be responsible of keeping investors up-to-date with business developments. They will recommend and provide insights on how you should move your stock price. Most importantly, they will effectively communicate with your audience as they are equipped with the relevant data and information. So never estimate a researcher, and when choosing an underwriting firm, be sure that its people can do the 'real' research.
Share This Article
