What does “margin” mean in the context of ECM?

In the context of Equity Capital Markets (ECM), "margin" refers to the difference between the offering price of a securities issuance and the costs incurred by underwriters to sell those securities. This margin represents the profit that underwriters can expect to earn for their services in facilitating the transaction. It is a critical measure because it reflects the financial incentive for underwriters to successfully price and place a new equity issue in the market.

Understanding this concept is essential for anyone involved in ECM, as it directly relates to the financial dynamics of underwriting and the pricing strategies executed during public offerings. The ability to manage and optimize this margin can significantly affect the overall success of an equity raise.