Welcome to Execution and Distribution: the unit that walks through what actually happens in the two-week sprint between the road show kickoff and the closing dinner. By the time a deal reaches this point, the registration is on file, the syndicate is set, and the bookrunner's job is to translate marketing into a printed transaction.
Exam Weight: Part of 27% / 20 items (Function 2)
Video Resources
What You'll Learn
In this unit, you'll cover:
- Sales Force Education and Marketing Strategy: How the lead bank arms its own internal sales force with the deal pitch before any outside investor sees a prospectus
- Road Show and Investor Targeting: One-on-one meetings, group lunches, and shareholder reviews that build the prospect list
- Building the Book and Indications of Interest (IOIs): The live ledger the syndicate manager uses to track demand at each price level
- Sizing, Pricing, and Timing: The factors (market conditions, IOIs, valuation, calendar) that translate the book into a final transaction size and offering price
- Allocation: Retail vs Institutional Demand: Pot mechanics, free retention, jump-ball, and designations
- Underwriter's Spread Components: The management / underwriting / selling-concession split that determines who gets paid for what
- New Issue Allocation Restrictions: The new-issue rule's prohibition on selling initial public offering (IPO) equity to industry insiders, plus the fixed-price offering and pre-listing transaction rules
- Greenshoe (Over-Allotment) Option: The 15% over-allotment mechanism for aftermarket price support
- Stabilization and Syndicate Covering: Stabilizing bids, penalty bids, and the recordkeeping regime
- Reg M Trading Restrictions on Participants: Restricted-period rules for distribution participants, Nasdaq passive market making, and the short-sale prohibition in connection with a public offering
- Suitability, Reg BI, and Form CRS: How retail-customer protections layer on top of distribution
- Exchange Listing and State Preemption: Initial listing thresholds for NYSE and Nasdaq plus how federal preemption of state registration works
Why This Matters
Execution and distribution sit inside the 27% Function 2 weight and pull the largest concentration of compliance-trap questions on the exam. Three families of facts cover most of what gets asked:
- Reg M trading restrictions: who can do what when, with hard rules on short selling and passive market making
- The new-issue rule and fixed-price offering rule: who can and cannot buy an IPO, and how syndicate members must price the deal during distribution
- Greenshoe and stabilization mechanics: the 15% cap, the 30-day window, and the rule that a stabilizing bid cannot exceed the offering price
These rules are tested by substance (timelines, thresholds, prohibitions), not by rule number. Memorize the numbers (5 business days, 30 days, 15%, $4 share price, 400 holders) and the trigger facts (short during the restricted period, then participate in the offering = strict-liability violation).
Let's start with the first marketing surface the deal touches: the firm's own internal sales force.