The book runner is an underwriter who maintains and manages the books of security offerings that are offered for sale as part of a new investment issue. This designation is a reference to the process of managing the books, which is also known as “running” in the industry. While there may be several underwriters involved in the issue, only the underwriter or company that serves as the broker for all the underwriting activity is referred to as the book runner.
One of the main benefits offered by a book runner is that the position serves as a central repository of all information relevant to the design and current status of the investment issue. The book runner functions as the final source of data regarding the issue. Generally, the entity that runs the books has access to updates and other pertinent information before it is available to the general public.
A book runner also functions as the mechanism that allows several investors to work together on a particular issue. For example, when there is a buyout of a corporation that requires the participation of several companies or investors to accomplish, one company is designated as the book runner. This one partner establishes the line of communication to complete the deal on behalf of all the investors and makes sure the interests of each participating party is protected.
It is not unusual for a group of investors to come together for the purpose of making an investment of some type. The group may designate one of their number to act as the book runner, establish a pool of reserves, and allow the runner to engage in deal negotiation on the behalf of all participants. In turn, the book runner is accountable to all the members of the group or consortium, making sure they have access to the books and also set up a consistent schedule for making regular reports to the group at large.
In many cases, the book runner will be an entity with a great deal of expertise in financial management, such as an investment bank. However, that is not necessarily the case. Many countries around the world would allow individual investors to function as the driving force behind a deal and function as the book runner for a group of investors. As long as the runner is able to meet the minimum requirements established in the country of origin, and has the confidence of all participants in the deal, the book runner can be just about anyone.