Bookrunner

Definition

Bookrunner in plain English

When a company sells new stocks or bonds to raise money, it hires investment banks to run the sale, and the bookrunner is the lead bank in charge of the whole show. Their key job is managing the 'order book' — the running tally of which investors want to buy, how much, and at what price — and using that demand to help set the final price and decide who gets how many shares. Picture the headliner organizing a big concert: they take all the ticket requests, gauge how hot demand is, and price and allocate the seats accordingly. Being the bookrunner is the most prestigious and best-paid role in a deal, which is why banks compete hard for it and their name sits first on the announcement.

Related Principles of Finance terms

• Agency bond
• American option
• Arbitrage pricing theory (APT)
• Asset-backed security (ABS)
• Basis risk
• Bid-ask spread
• Carhart four-factor model
• Clientele effect
• Collateralized debt obligation (CDO)
• Common-size analysis