Chapter 18: Initial public offerings, investment banking and fin restructuring

What are some types of IPO offerings?

1. best effort IPO 2. firm commitment IPO 3. Auction IPO

What are some benefits of going public?

1. new capital for the company 2. publicly traded stock for use in acquisitions 3. listed stock for use as a compensation vehicle 4. personal wealth and liquidity

IPO Puzzles

1. the average IPO seems to be priced too low 2. new issues appear cyclical 3. the transaction costs of an IPO are high 4. long-run performance after an IPO is poor on average

What are some drawbacks of going public?

1. the financial cost of an IPO 2. the managerial cost of an IPO 3. stock price emphasis 4. life in a fishbowl

Why are IPOs special?

1. there are no existing market price 2. their shares are very risky 3. the issuer faces many special regulations

What are the mechanics of an IPO?

1. underwriters and the syndicate 2. SEC filings 3. valuation 4. pricing the deal and managing the risk

What is an IPO?

When a company first sells shares of stock to the public