IPO Underwriting

IPO underwriting is when a financial institution, called an underwriter, helps a company sell its shares to the public for the first time. The underwriter assesses the company's value, sets an initial price, and commits to buy the shares from the company, then sells them to investors. This process reduces the company's risk, as the underwriter guarantees the sale of a certain number of shares. Essentially, the underwriter acts as a bridge between the company going public and investors, providing expertise, market access, and financial backing to ensure a smooth and successful offering.