The "syndicate bid" describes two prices. The first definition of the term refers to a climate of competition between various syndicates. It describes the price a syndicate consisting of different (investment) banks
offers to the issuer of a security. In order to win the deal each syndicate might choose a high bid, but also faces the risk of not being able to place the issue in the market in case of an overpricing.
During the so-called "price meetings", which take place before announcing their syndicate bid the members of an underwriting syndicate try to reach consensus about bid and of er prices. After winning the deal, the corresponding syndicate starts selling the issue at the agreed offer price.
As soon as the syndicate is dissolved each underwriter is allowed to sell at an arbitrary price. In this context, the syndicate may also be formed by two or more venture capitalists or buyout companies, which jointly try to acquire a target company. Therefore, the syndicate bid is the price the syndicate is willing to pay for their target.
Th e second price described by the term "syndicate bid" refers to the single price of a security agreed upon by the syndicate members. In this context, the Securities and Exchange Commission (SEC) allows the syndicate manager and all other syndicate members to stabilize the market by increasing the demand of the issued security (mostly shares in an IPO) during the offering period.
This activity aims at keeping the price stable, which is of importance, especially during periods of rather weak demand. Under Regulation M of the Securities Act of 1934, stabilization is allowed as an appropriate mechanism in order to distribute securities. Further legal sources governing stabilization in the United States can be found in Regulation K, Rule 104, which replaced Rule 10b-7.
offers to the issuer of a security. In order to win the deal each syndicate might choose a high bid, but also faces the risk of not being able to place the issue in the market in case of an overpricing.
During the so-called "price meetings", which take place before announcing their syndicate bid the members of an underwriting syndicate try to reach consensus about bid and of er prices. After winning the deal, the corresponding syndicate starts selling the issue at the agreed offer price.
As soon as the syndicate is dissolved each underwriter is allowed to sell at an arbitrary price. In this context, the syndicate may also be formed by two or more venture capitalists or buyout companies, which jointly try to acquire a target company. Therefore, the syndicate bid is the price the syndicate is willing to pay for their target.
Th e second price described by the term "syndicate bid" refers to the single price of a security agreed upon by the syndicate members. In this context, the Securities and Exchange Commission (SEC) allows the syndicate manager and all other syndicate members to stabilize the market by increasing the demand of the issued security (mostly shares in an IPO) during the offering period.
This activity aims at keeping the price stable, which is of importance, especially during periods of rather weak demand. Under Regulation M of the Securities Act of 1934, stabilization is allowed as an appropriate mechanism in order to distribute securities. Further legal sources governing stabilization in the United States can be found in Regulation K, Rule 104, which replaced Rule 10b-7.
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| Syndicate Bid |
