When a company wants to raise capital in the public markets it may decide to issue stock. In order to do this, the company obtains an investment banker who will agree to underwrite the stock offering. That is, the investment banker, as underwriter, will agree to represent the company in all aspects of its new equity issuance. The underwriter helps the company prepare a prospectus - a detailed analysis of the offering, the company, its history, products/services, financial data, management structure - and identifies any risks associated with investing in the security. The underwriter also helps the company file its registration statement, which includes the prospectus, with the Securities and Exchange Commission (SEC). Prior to the SEC declaring the registration statement effective, the underwriter will market the offering to the public. Once the issuer and the underwriter decide to actually sell and issue the shares, they seek to have the SEC declare the registration statement effective and settle the share purchases in three business days. At Morgan Stanley, our Investment Bankers meet with a prospective issuer to decide what role we can play in the process. We will usually be retained as either the lead or co-lead manager and the Investment Banking, Equity Capital Markets and Retail Branch Office divisions will work together to distribute stock to retail and institutional investors. The Equity Syndicate Desk, a department within the Equity Capital Markets Group, distributes stock to our Financial Advisor Network and our online customer base. The Branch Offices and our online division will then market and distribute the syndicate stock to retail investors.

Types of Equity Syndicate Issues

There are three primary types of equity syndicate issues:

	Initial Public Offerings (IPOs) - Companies often need additional capital to fund their growth. If they find they can no longer raise it through private channels (loans, endowments or venture capitalism), "going public," or issuing stock to the public, may be the answer.
	Follow-Ons (Secondary Offerings) - Typically, a follow-on offering could be structured one of two ways. Companies that have already gone public can issue additional shares to fund new projects or acquisitions, or selling shareholders could monetize their position through a marketed follow-on offering. If a follow-on is offered and includes selling shareholders, the company does not receive the proceeds from the selling shareholder(s). These newly issued shares may seem less attractive to investors, since increasing the amount of outstanding company stock may dilute (reduce) the average earnings per share. On the other hand, follow-on offerings give investors the opportunity to invest in known, successful companies at a discount, without having to pay a commission charge.
	International Issues - When foreign companies need more capital, the U.S. markets may represent a source of demand. This gives domestic investors the opportunity to diversify and invest in companies that were previously unavailable to them.