Re-Offer Price

Written By
Paul Tracy
Updated July 2, 2021

What is a Re-Offer Price?

A re-offer price is the price at which an underwriter offers a security to the general public.

How Does a Re-Offer Price Work?

In order to sell its securities to the public, a company first needs to retain the services of an investment banker to underwrite the issue. The role of the underwriter is to raise capital for the issuing company. The underwriter accomplishes this by purchasing the securities from the issuing corporation at a predetermined price, then reselling them to the public for a profit. The re-offer price is that resale price.

Why Does a Re-Offer Price Matter?

In most cases, a single investment-banking firm takes the lead role in setting up a new IPO or bond issue. This lead firm, referred to as the managing underwriter, then often forms a larger group of investment bankers, called an underwriting syndicate, to participate in the sale. This syndicate, in turn, often gathers an even larger group of broker-dealers to assist with the distribution of the new issue. Their profits come from the advisory fee, which is a percentage of the offering size, as well as the difference between the purchase and the re-offer price.

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