What does an underwriting agreement detail?

An underwriting agreement is a formal contract between an issuer and an underwriter that outlines the terms of a securities offering. This agreement is crucial as it specifies the responsibilities of both parties, including the price at which the securities will be sold, the total amount of securities being issued, and the timing of the offering. It also includes provisions related to the underwriter's compensation, any conditions that must be met for the deal to proceed, and the obligations regarding the due diligence process. By defining these terms, the underwriting agreement establishes a framework for how the offering will be executed, ensuring that both the issuer and underwriter are aligned in their goals and expectations for the transaction.