Lead Manager

Lead Manager - Powerful Earth wizard with a book on the hands
Lead Manager

This is the institution, typically an investment bank or its venture capital arm, that takes the role of organizing a round of venture capital funding. The lead manager typically finds other lending organizations or investors to create a syndicate, negotiate the terms with the company to be funded, and assess market conditions. In this case, the lead manager is also named syndicate manager, managing underwriter, or lead underwriter.

Typically, lead managers promote the stability of the share price once post-IPO trading starts. With the price manipulation permission from SEC, they might take a series of activities (e.g., post-IPO purchasing of shares) against the aftermarket bearish selling pressure.

Some literature also focuses on the profitability of lead manager’s market making behavior. Since lead managers are at an advantage in collecting information and placing shares, they can beat other investors acting as market maker.

Ellis et al. (2002) document that in Nasdaq because of the profitability of such activities, this making behavior in which the lead manager engages can last for a long time during the post-IPO period. It is opposite toward the situation in terms of the smaller IPOs. In that case, lead manager’s making behavior ends shortly after the IPO.