What is the issuers role in a public offering?
The company seeking to go public, called the issuer, will issue a prospectus. This prospectus will detail information about the company and its potential so that interested parties can review it. The prospectus may include a preliminary price for the shares. The company issuing the shares (the issuer) and the underwriter may change the price of the shares when they are offered, depending upon the market for the shares at the time of the offering. The issuer and the underwriter will try to price the shares high enough to generate the profits that the issuer wants, but low enough that the underwriter can sell all of the shares. Most shares of an anticipated initial public offering will be purchased by individuals or entities with close relationships to the underwriter and the other brokerages that are a part of the marketing and sale of the shares. Individuals without these connections will usually have to wait to purchase shares in the company until the initial buyers sell their shares.
