Whenever a company makes the decision to go public , its first task is to select the underwriters.

Underwriters act as financial midwives to a new issue.

Usually they play a triple role : First they provide the company with procedural and financial advice , then they buy the issue , and finally they resell it to the public.

Established underwriters are careful of their reputation and will not handle a new issue unless they believe the facts have been presented fairly.

Thus , in addition to handling the sale of a company ’ s issue , the underwriters in effect give their seal of approval to it.

They prepare a registration statement for the approval of the Securities and Exchange Commission ( SEC ).

In addition to registering the issue with the SEC , they need to check that the issue complies with the so-called blue-sky laws of each state that regulate sales of securities within the state.

While the registration statement is awaiting approval , underwriters begin to firm up the issue price.

They arrange a road show to talk to potential investors.

Immediately after they receive clearance from the SEC , underwriters fix the issue price.

After that they enter into a firm commitment to buy the stock and then offer it to the public , when they haven ’ t still found any reason not to do it .