What is the takedown price?

The takedown price refers specifically to the price at which syndicate members purchase securities from the managing underwriter in a public offering. This price is lower than the public offering price, allowing syndicate members to sell the securities at the offering price and generate a profit. This mechanism is essential in underwriting processes, particularly in investment banking, as it establishes the financial arrangement among the underwriters coordinating the sale.

Understanding this term also highlights the structure of underwriting syndicates, where various financial institutions come together to spread the risk associated with large securities offerings. This price is distinct from the public offering price, which is what individual investors ultimately pay when they buy the securities in the open market.