A bank that commits to buying an issuer's shares at the offering price and reselling them to investors, taking on the risk that the shares don't sell at that price. Underwriters are compensated through a discount (a percentage of the offering size) and are named in every registration statement.
Underwriters take on real financial risk by committing capital before knowing final demand, which is why the underwriting discount is one of the largest single costs of going public, commonly 5-7% of proceeds. A large, well-known underwriting syndicate can also lend a smaller or less familiar company credibility with institutional investors who might otherwise be wary of an unproven name.
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