For most firm commitment underwritings, the managing investment bank arranges investment banking syndicates to help distribute shares of the newly public firm. Syndicates serve several purposes. First, a syndicate broadens the market base to include clients from other investment banking firms, thus allowing a broader distribution of the new issue. Second, the syndicate allows the managing investment bank to diversify or spread the risk of underwriting the new issue. Rather than purchasing the entire issue, the managing investment bank actually commits capital to purchase and resell only a portion of the issue; the remainder of the funds comes from members of the syndicate.