Investment Banking Terminology: Lead Left Bookrunner

The “Lead Left” Bookrunner is the investment bank chosen by a client to lead a capital markets transaction and is usually identified as the upper-left hand bank listed on the offering document cover.  Typically the Lead Left Bookrunner has been involved in the proposed deal from the onset and largely controls transaction details (roadshow and marketing process, updates with capital markets desk, drafting of offering documents, diligence sessions, etc) and generally gets a better economic position in the transaction and is likely to be selected for other deal functions (such as stabilization agent or structuring agent).

Facebook preliminary prospectus cover showing bookrunners and co-managers

Morgan Stanley was the Lead Left Bookrunner on the Facebook IPO (but given the problems with that deal they might wish they'd been on the right)

 

Why is being the Lead Left Bookrunner important?  Being on the left is the most prestigious position for a bank to have on a transaction – the managing director who wins the deal gains status with other potential clients in the same sector who may consider a similar transaction at some point in the future.  Winning enough deals can establish a bank as the de facto “expert” in that category of transaction for that sector.  Consistently being the Lead Left Bookrunner indicates that a bank is very well plugged-in to an industry (or deal type – ie one bank may do a significant number of high yield bond deals in the media industry).  The insights gleaned (both industry knowledge and deal execution experience) from leading deals is critically important in building and broadening client relationships for the senior bankers.

What does being “on the left” mean for the junior banking team? Put simply: more work.  If one were just to calculate economic benefit per man-hour expended, being a non-Left Bookrunner would be much more financially lucrative than being on the left.  Often the non-Left Bookrunners will participate in the initial organizational meeting and subsequent drafting and diligence sessions, but the Left Bookrunner will drive 99% of the marketing materials, financial documentation and quantitative analysis/modeling.

 

 

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