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Finance: What is an Underwriter? 82 Views
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What is an underwriter? Hit play to find out.
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Transcript
- 00:00
finance a la shmoop what is an underwriter Undertaker underwriter
- 00:09
taking your company public well then you need one of these guys and yeah if [Woman writing at a desk]
- 00:12
things go poorly well then you may need one of these guys but if things go well [Gravestone]
- 00:16
an underwriter will get to know your company audit your financials give their
- 00:21
Good Housekeeping Seal of Approval to the investment community with whom they
Full Transcript
- 00:27
deal regularly and introduce you as part of their family selling a piece of your
- 00:32
company to that world you know hedge funds mutual funds private wealthy [List of benefits that come with an underwriter]
- 00:36
investors such that they are the you know financial wind beneath your wings [Skyscraper flying away]
- 00:41
for a brief moment in time the underwriter usually an investment bank
- 00:46
like the vaunted Goldman Sachs or Morgan Stanley or JP Morgan or UBS or Sumitomo
- 00:52
will actually themselves own whatever piece of your company you are bringing [Logos for the banks appearing]
- 00:57
public like if you're selling 18 million shares at 20 bucks the bank's our
- 01:01
underwriters take a new public will own all 18 million shares having paid you
- 01:07
$19.60 for them and then turning around five minutes later and selling them for
- 01:10
20 bucks to John Q invest or making 40 cents a share in spread or markup or in [Spread calculation shown]
- 01:17
this case 40 times 18 million or 7.2 million dollars just for the pleasure so
- 01:23
that's an underwriter and if they screw up well yeah and ironically the [Underwriter stamp]
- 01:27
announcement he'll see in the digital paper is usually in the shape of a
- 01:31
tombstone announcing everything why a tombstone well because it represents the
- 01:35
death of ambiguity or confusion in that company's former life as a private one [Gravestone for ambiguity]
- 01:40
The Undertaker's hopefully have far far away [The Undertaker running away with the word confusion]
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