Variations in the Underwriting Process

Not all deals are underwritten using the traditional syndicate process we have described. Variations in the United States and foreign markets include the bought deal for the underwriting of bonds, the auction process for both stocks and bonds, and a rights offering for underwriting common stock. The mechanics of a bought deal are as follows. The lead manager or a group of managers offers a potential issuer of debt securities a firm bid to purchase a specified amount of the securities. The...