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Category — Market Participants
By Konstantin Vasilev Member of the Board of Directors of Cbonds, Ph.D. in Economics
Updated October 23, 2023

What Does a Bookrunner Mean?

A bookrunner plays a crucial role in the process of underwriting and managing the issuance of securities, such as stocks or bonds, on behalf of a company or other entity seeking to raise capital. The term "bookrunner" refers to the lead underwriter or investment bank responsible for coordinating the entire underwriting process.

In an initial public offering (IPO) or other security issuance, the bookrunner is typically the lead manager or lead underwriter, and sometimes they are referred to as the "lead bookrunner."


Bookrunners Explained

Bookrunners, also known as lead arrangers or lead managers, play a vital role in various parts of the financial industry, including initial public offerings (IPOs) and leveraged buyouts (LBOs). Their responsibilities encompass assessing a company’s financial health and evaluating current market conditions to determine the initial value and quantity of shares to be offered to private parties. This evaluation is a critical step in the IPO process, but bookrunners may also apply their expertise to secondary offerings.

To mitigate risk, bookrunners often form syndicates with other underwriting firms when issuing new equity, debt, or securities. This collaboration is common in the investment banking sector and typically represents a temporary arrangement among different entities. In the context of an IPO, the bookrunner takes on the role of lead underwriters and collaborates with other investment banks to establish an underwriter syndicate. This syndicate essentially creates the initial sales force responsible for distributing the shares to institutional and retail clients.

It’s important to note that the underwriter syndicate receives a substantial commission, often ranging from 6% to 8% of the total offering amount. The lead underwriter, which is the bookrunner, typically holds the majority of the shares, further reinforcing their key position in the process.

In summary, bookrunners are pivotal figures in financial transactions, such as IPOs and LBOs, as they lead the assessment of companies, structure deals, and coordinate with other underwriting firms to successfully issue new securities to the market.

Responsibilities of Bookrunners

  1. Determining the Final Offering Price. One of the primary roles of an underwriter, including the lead bookrunner, is to establish the final offering price for the securities being issued. This pricing decision has significant implications, as it affects both the proceeds received by the issuer and the ease of selling the securities to buyers. The issuer and lead bookrunner often collaborate to determine the optimal price. The Securities and Exchange Commission (SEC) plays a crucial role in making the registration statement effective.

  2. Confirming Orders. After the pricing decision is made, underwriters, including the bookrunner, reach out to potential buyers or subscribers to confirm their orders. In cases of high demand, the underwriters and the issuer may consider adjusting the offering price and reconfirming sales with subscribers.

  3. Creating a Book. Bookrunners compile a book that contains a working list of parties interested in participating in the new offering or issue. This book serves as a valuable tool for tracking potential investors and gauging their level of interest. It aids in setting the opening price for an initial public offering (IPO) and provides insights into investor sentiment.

  4. Greenshoe Option. In situations where demand for the shares is exceptionally high, the lead bookrunner may negotiate with the issuer to create an over-allotment of shares. This option, known as a "greenshoe option," allows the underwriting firm to issue additional shares beyond the original offering size. This can lead to increased revenue for the underwriter if exercised.

  5. Risk Management. Underwriting stock offerings involves inherent risks, such as the possibility of the stock’s value decreasing once it begins trading publicly. To mitigate these risks, large investment banks often engage in a diverse array of offerings throughout the year. By spreading their involvement across multiple transactions and issuances, they reduce the concentration of risk associated with the outcome of a single company’s offering.

Bookrunner vs. Underwriter


  • Definition. An underwriter is a party, often a bank or financial institution, that buys the shares sold through IPO and then sells them to the public or investors.

  • Function. Underwriters essentially act as intermediaries between the issuer and investors. They assume the risk of purchasing the securities from the issuer at an agreed-upon price and then work to sell these securities to the public, either directly or through a syndicate.

  • Risk Assumption. Underwriters take on the financial risk associated with holding the securities until they are sold to investors. If the demand for the securities is lower than anticipated, underwriters may be left with unsold shares, incurring potential losses.


  • Definition. A bookrunner is a specific type of underwriter who holds a prominent position in the underwriting process. It is typically the lead underwriter responsible for overseeing and coordinating the entire underwriting process.

  • Role. The bookrunner’s primary role is to manage and lead the syndicate of underwriters involved in the issuance. They are listed first among all the underwriters and exercise significant control over the syndicate’s activities.

  • Coordination. Bookrunners coordinate various aspects of the offering, including setting the offering price, marketing the securities, and managing the distribution to investors. They work closely with several underwriters to ensure a successful issuance.

  • Leadership. Due to their leadership position, bookrunners often have a more substantial stake in the offering and greater influence in decision-making. In cases of high demand for shares, they may negotiate with the issuer to exercise options like the "greenshoe option" to increase the size of the offering.

Bookrunner vs. Lead Coordinator


  • Responsibilities. Bookrunners are primarily concerned with underwriting and overseeing the syndicate of underwriters in the issuance of securities, such as stocks or bonds. They play a central role in structuring the offering, setting the offering price, and managing the distribution of securities to investors.

  • Role in Underwriting. Bookrunners take on a substantial part of the workload in the underwriting process. They lead the efforts in marketing the securities, assessing market conditions, and coordinating the entire offering.

  • Fees. Bookrunners typically collect significant fees for their services. They often receive the largest share of fees among the underwriting team due to their leadership and responsibilities in the process.

Lead Coordinator

  • Responsibilities. Lead coordinators are more closely associated with the operational and regulatory aspects of a company. They may be involved in tasks related to the company’s day-to-day operations, compliance with regulations, and other administrative functions.

  • Marketing and Listing. Lead coordinators can also play an important role in marketing the company and facilitating its listing on the stock market. This involves activities related to investor relations, public relations, and regulatory compliance.

  • Workload. While lead coordinators have important responsibilities, they typically do not handle the extensive workload that bookrunners do in terms of underwriting and structuring the offering.

  • Fees. Lead coordinators may receive compensation for their services, but their fees are generally not as substantial as those of bookrunners, who are more directly involved in the financial aspects of the offering.

Bookrunner vs. Lead Manager


  • Responsibilities. Bookrunners are primarily responsible for the underwriting process in securities offerings. They take the most important role in structuring the offering, setting the offering price, and managing the syndicate of underwriters.

  • Underwriting Focus. Bookrunners are deeply involved in underwriting, which involves assessing market conditions, coordinating the offering, and managing the distribution of securities to investors.

  • Influence on Underwriting. Bookrunners exert significant influence in underwriting decisions, as they lead the effort in marketing the securities and ensuring the success of the offering. They often collect substantial fees for their services.

Lead Manager

  • Responsibilities. The role of a lead manager differs from that of a bookrunner. Lead managers are primarily responsible for facilitating the sale of IPO shares. They focus on finding leads or potential buyers for the IPO and ensure a smooth process without significant hurdles.

  • Regulatory Compliance. Lead managers play a role in regulatory compliance, including drafting the proposal for the IPO to ensure it meets the requirements of the Securities and Exchange Commission (SEC). They work to secure SEC approval for the offering.

  • Marketing and Listing. Lead managers can also contribute to marketing efforts for the IPO, helping to generate interest among potential investors. They may play a role in facilitating the company’s listing on the stock market.

  • Influence on Marketing. While lead managers provide input on marketing and regulatory aspects, their primary focus is on facilitating the sale of shares to investors.


  • What does a bookrunner do?

  • What is a joint bookrunner?

  • What is the role of a bookrunner?

  • What is a bookrunner for a credit facility?

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