Lead underwriter — The investment bank in charge of setting the offering price of an IPO and allocating shares to other members of the syndicate. Also called lead manager.

Lock-up period — The time period after an IPO when insiders at the newly public company are restricted by the lead underwriter from selling their shares. Usually lasts 180 days.

New issue — Same as an IPO.

Offering price — The price that investors must pay for allocated shares in an IPO. Not the same as the opening price, which is the first trade price of a new stock.

Opening price — The price at which a new stock starts trading. Also called the first trade price. Underwriters hope that the opening price is above the offering price, giving investors in the IPO a premium.

Oversubscribed — Defines a deal in which investors apply for more shares than are available. Usually a sign that an IPO is a hot deal and will open at a substantial premium.

Penalty bid — A fee charged to brokers by the lead underwriter for having to take back shares already sold. Meant to discourage flipping.

Pipeline — A term used to describe the stage in the IPO process at which companies have registered with the SEC and are waiting to go public.

Premium — The difference between the offering price and opening price. Also called an IPO's pop.

Prospectus — The document, included in a company's S-1 registration statement, which explains all aspects of a company's business, including financial results, growth strategy, and risk factors. The preliminary prospectus is also called a red herring because of the red ink used on the front page, which indicates that some information � such as the price and share amounts � is subject to change.

Proxy — An authorization, in writing, by a shareholder for another person to represent him/her at a shareholders' meeting and exercise voting rights.

Quiet period — The time period in which companies in registration are forbidden by the Securities and Exchange Commission to say anything not included in their prospectus, which could be interpreted as hyping an offering. Starts the day a company files an S-1 registration statement and lasts until 25 days after a stock starts trading. The intent and effect of a quiet period have been hotly debated.

Road show — A tour taken by a company preparing for an IPO in order to attract interest in the deal. Attended by institutional investors, analysts, and money managers by invitation only. Members of the media are forbidden.

Selling stockholders — Investors in a company who sell part or all of their stake as part of that company's IPO. Usually considered a bad sign if a large portion of shares offered in an IPO comes from selling stockholders.

S-1 — Document filed with the Securities and Exchange Commission announcing a company's intent to go public. Includes the prospectus; also called the registration statement.

Spinning — The practice by investment banks of distributing shares to certain clients, such as venture capitalists and executives, in hopes of getting their business in the future. Outlawed at many banks.

Syndicate — A group of investment banks that buy shares in an IPO to sell to the public. Headed by the lead manager and disbanded as soon as the IPO is completed.

Venture capital — Funding acquired during the pre-IPO process of raising money for companies. Done only by accredited investors.