The Process of Ipo - 3185 Words

A Guide to the Initial Public Offering Process Katrina Ellis (kle3@cornel.edu) Roni Michaely (rm34@cornell.edu) and Maureen O’Hara (mo19@cornell.edu) January 1999 *All Authors are from Cornell University, Johnson Graduate School of Management, Cornell University Ithaca NY 14853. Michaely is also affiliated with Tel-Aviv University. A Guide to the Initial Public Offering Process A milestone for any company is the issuance of publicly traded stock. While the motivations for an initial public offering are straightforward, the mechanism for doing so is complex. In this paper, we outline the process by which companies are brought to market in an initial public offering. Our goals here are to delineate the specific steps†¦show more content†¦The remaining portion of the gross spread (approximately 20%) is used to cover underwriting expenses (underwriter counsel, road show expenses, etc.). If anything remains after deducting all expenses, it is divided proportionately among the underwriter and syndicate members depending on the amount of securities each underwrote. One of the lead underwriter’s first-agenda items (usually before any significant expenses have been incurred) is to draft a letter of intent. Indeed, an important aspect of the letter of intent is to protect the underwriter against any uncovered expenses in the event the offer is withdra wn either during the due diligence and registration stage, or during the marketing stage. Thus, the letter of intent contains a clause requiring the company to reimburse the underwriter for any out-of-pocket expenses incurred during the process. Another important aspect of the letter is the gross spread or the underwriting discount. In most cases, the gross spread is 7% of the proceeds (see Chen and Ritter, 1998 for an excellent discussion of the uniform size of the gross spread). The letter also typically includes: a commitment by the underwriter to enter into a firm commitment agreement (or other underwriting agreements, as the case may be); an agreement by the company to cooperate in all due diligence efforts, and to make available all relevantShow MoreRelatedThe Process of Ipo3185 Words   |  13 PagesA Guide to the Initial Public Offering Process Katrina Ellis (kle3@cornel.edu) Roni Michaely (rm34@cornell.edu) and Maureen O’Hara (mo19@cornell.edu) January 1999 *All Authors are from Cornell University, Johnson Graduate School of Management, Cornell University Ithaca NY 14853. Michaely is also affiliated with Tel-Aviv University. A Guide to the Initial Public Offering Process A milestone for any company is the issuance of publicly traded stock. While the motivations for an initialRead MoreIpo Process in Bangladesh2563 Words   |  11 Pagesbasic idea of Initial Public Offering (IPO). In this report we try to find out, what are steps a company has to go through for IPO, according to the Security Exchange Commission (public issue rules 2006). At beginning of this report we give a little idea about IPO, then we descried why company go for IPO, after then we go through the IPO process step by step, and finally we draw a flowchart of IPO process with time allocation. Generally companies go for IPO to raise capital and other reasons areRead MoreIpo Process : Going On A Road Show1671 Words   |  7 PagesIPO Process – going on a road show: An IPO road show is a presentation by the company offering the initial public offering (IPO) to analysts, fund managers and potential buyers. The most important part of the IPO process is going on a road show. The purpose of the road show is to attract deep-pocketed investors. The road show happens before the deal is announced to the market and it represents action packed 2 weeks consisting of intensive meetings. The show requires 8-10 days multiple cityRead MoreFeasibility Report On Ipos, And The Process Of Buying An Ipo1446 Words   |  6 PagesI compile, through various mediums, information regarding initial public offerings, or IPO’s. The report includes areas such as defining an IPO, the performance of IPO’s, the current market for IPO’s, and the process of buying an IPO. Therefore, the feasibility report is directed at the retail or non-professional investor who may be engaged in purchasing IPO’s. I look to determine if the underlying facts creat e certainty that these instruments are profitable currently and in the long run. It appearsRead MoreThe Process of an Initial Public Offering (Ipo). the Underpricing Problem.3310 Words   |  14 Pagesa portion of itself to a large number of diversified investors. What occurs in this case is named IPO (Initial Public Offering): a security is sold to the general public for the first time, and thanks to this, usually, a liquid market will develop. The process is long and subject to strict rules and regulations. My purpose is that of going through the main steps of it, analysing pros and cons of IPOs and providing explanations for their apparent â€Å"underpricing†. I will mainly concentrate on the URead MoreWhat Type of Ipo Should Avaya Use - a Traditional Ipo or an Online Auction1428 Words   |  6 PagesCourse Number: FIN501 Module 1 Case Assignment Introduction Upon deciding to go public, a company looks into preparing an initial public offering (IPO). There are two IPOs with which a company can utilize: a traditional IPO or the relatively new Auction-based IPO that was made popular by Google. Avaya is currently planning for IPO. â€Å"Avaya is a global leader in business communications systems. The company provides unified communications, contact centers, data solutions and related servicesRead MoreInitial Public Offering: A Case Study of Avaya1315 Words   |  5 Pagespublic offering (IPO), the firm needs to determine how it wants to go about that process. There are a number of factors that the company needs to take into consideration. These include the expected buyers, the price, the method of the offering (online or traditional) and the choice of brokerage. Avaya is a phone systems maker that has a value of approximately $1 billion. The market for technology-based IPOs is good right now, with several companies coming to market. No t all the IPOs have been successfulRead MoreFin501 Case 11361 Words   |  6 PagesTrident University International Module 1 Case Assignment FIN501: Strategic Corporate Finance Dr. John Halstead August 9, 2013 AVG Technology: Traditional IPO VS. Auction Based IPO Our nation has suffered through a recession for the past decade. Small and large businesses, alike, have suffered directly resulting in American jobs being lost, the national debt skyrocketing into the trillions, and parents struggling to keep food on the table for their children. Foresight is a trait thatRead MoreInitial Public Offering For A Global Firm1196 Words   |  5 Pagesï » ¿Initial Public Offering for a Global Firm Introduction Initial Public Offering is a rigorous process where a firm decides to go public in order to enable it raise capital for the company that will enable it to fund its operations such as expansion plans, generate profits as well as make its investors happy. For the IPO to go successfully there are a number of important factors and players that come into consideration. These include investment bankers, underwriters, pricing, demand and supply amongRead MoreIpo : A Business Cycle Essay1305 Words   |  6 Pagesand start making positive profits, a company may choose of make an IPO. The term initial public offering (IPO) is used by company to raise capital by selling stock in primary market. Investopedia defines an initial public offering (IPO) as the first time a company sells its stock to the public. This is a way to raise money by issuing debt and it is only called IPO if the company have never issued equity to the public before. IPO is usually referred â€Å"going public† because company by selling portion The Process of Ipo - 3185 Words A Guide to the Initial Public Offering Process Katrina Ellis (kle3@cornel.edu) Roni Michaely (rm34@cornell.edu) and Maureen O’Hara (mo19@cornell.edu) January 1999 *All Authors are from Cornell University, Johnson Graduate School of Management, Cornell University Ithaca NY 14853. Michaely is also affiliated with Tel-Aviv University. A Guide to the Initial Public Offering Process A milestone for any company is the issuance of publicly traded stock. While the motivations for an initial public offering are straightforward, the mechanism for doing so is complex. In this paper, we outline the process by which companies are brought to market in an initial public offering. Our goals here are to delineate the specific steps†¦show more content†¦1 The power of Congress to enact legislation regulating securities transactions is based in the Commerce Clause of the constitution. The Commerce Clause which is contained in Article I, Section 8 of the constitution gives Congress the power â€Å"to regulate commerce †¦ among the several states †¦Ã¢â‚¬  So long as a transaction makes use of â€Å"any means or instruments of transportation or communication in interstate commerce†, it will fall within the reach of the federal securities laws. This includes the use of telephones and the mails. It is rare that a transaction will not use some instrumentality of interstate commerce and will thus fall outside the reach of the law. In addition, Congress has given the Securities and Exchange Commission the authority to administer the securities laws and to promulgate rules and regulations to supplement its enforcement powers. These additional rules are necessary to clarify statutes that are vague or ambiguous or to make substantive additions to the statutes so long as they are not inconsistent with the legislatively enacted statutes. In addition to the federal laws, the states all have their own securities laws, 4 To achieve this, the underwriter has a â€Å"due diligence† requirement to investigate the company and verify the information it provides about the company to investors. The Securities Act also makes it illegal to offer or sell securities to the public unless they have first been registered.Show MoreRelatedThe Process of Ipo3185 Words   |  13 PagesA Guide to the Initial Public Offering Process Katrina Ellis (kle3@cornel.edu) Roni Michaely (rm34@cornell.edu) and Maureen O’Hara (mo19@cornell.edu) January 1999 *All Authors are from Cornell University, Johnson Graduate School of Management, Cornell University Ithaca NY 14853. Michaely is also affiliated with Tel-Aviv University. A Guide to the Initial Public Offering Process A milestone for any company is the issuance of publicly traded stock. While the motivations for an initialRead MoreIpo Process in Bangladesh2563 Words   |  11 Pagesbasic idea of Initial Public Offering (IPO). In this report we try to find out, what are steps a company has to go through for IPO, according to the Security Exchange Commission (public issue rules 2006). At beginning of this report we give a little idea about IPO, then we descried why company go for IPO, after then we go through the IPO process step by step, and finally we draw a flowchart of IPO process with time allocation. Generally companies go for IPO to raise capital and other reasons areRead MoreIpo Process : Going On A Road Show1671 Words   |  7 PagesIPO Process – going on a road show: An IPO road show is a presentation by the company offering the initial public offering (IPO) to analysts, fund managers and potential buyers. The most important part of the IPO process is going on a road show. The purpose of the road show is to attract deep-pocketed investors. The road show happens before the deal is announced to the market and it represents action packed 2 weeks consisting of intensive meetings. The show requires 8-10 days multiple cityRead MoreFeasibility Report On Ipos, And The Process Of Buying An Ipo1446 Words   |  6 PagesI compile, through various mediums, information regarding initial public offerings, or IPO’s. The report includes areas such as defining an IPO, the performance of IPO’s, the current market for IPO’s, and the process of buying an IPO. Therefore, the feasibility report is directed at the retail or non-professional investor who may be engaged in purchasing IPO’s. I look to determine if the underlying facts creat e certainty that these instruments are profitable currently and in the long run. It appearsRead MoreThe Process of an Initial Public Offering (Ipo). the Underpricing Problem.3310 Words   |  14 Pagesa portion of itself to a large number of diversified investors. What occurs in this case is named IPO (Initial Public Offering): a security is sold to the general public for the first time, and thanks to this, usually, a liquid market will develop. The process is long and subject to strict rules and regulations. My purpose is that of going through the main steps of it, analysing pros and cons of IPOs and providing explanations for their apparent â€Å"underpricing†. I will mainly concentrate on the URead MoreWhat Type of Ipo Should Avaya Use - a Traditional Ipo or an Online Auction1428 Words   |  6 PagesCourse Number: FIN501 Module 1 Case Assignment Introduction Upon deciding to go public, a company looks into preparing an initial public offering (IPO). There are two IPOs with which a company can utilize: a traditional IPO or the relatively new Auction-based IPO that was made popular by Google. Avaya is currently planning for IPO. â€Å"Avaya is a global leader in business communications systems. The company provides unified communications, contact centers, data solutions and related servicesRead MoreInitial Public Offering: A Case Study of Avaya1315 Words   |  5 Pagespublic offering (IPO), the firm needs to determine how it wants to go about that process. There are a number of factors that the company needs to take into consideration. These include the expected buyers, the price, the method of the offering (online or traditional) and the choice of brokerage. Avaya is a phone systems maker that has a value of approximately $1 billion. The market for technology-based IPOs is good right now, with several companies coming to market. No t all the IPOs have been successfulRead MoreFin501 Case 11361 Words   |  6 PagesTrident University International Module 1 Case Assignment FIN501: Strategic Corporate Finance Dr. John Halstead August 9, 2013 AVG Technology: Traditional IPO VS. Auction Based IPO Our nation has suffered through a recession for the past decade. Small and large businesses, alike, have suffered directly resulting in American jobs being lost, the national debt skyrocketing into the trillions, and parents struggling to keep food on the table for their children. Foresight is a trait thatRead MoreInitial Public Offering For A Global Firm1196 Words   |  5 Pagesï » ¿Initial Public Offering for a Global Firm Introduction Initial Public Offering is a rigorous process where a firm decides to go public in order to enable it raise capital for the company that will enable it to fund its operations such as expansion plans, generate profits as well as make its investors happy. For the IPO to go successfully there are a number of important factors and players that come into consideration. These include investment bankers, underwriters, pricing, demand and supply amongRead MoreIpo : A Business Cycle Essay1305 Words   |  6 Pagesand start making positive profits, a company may choose of make an IPO. The term initial public offering (IPO) is used by company to raise capital by selling stock in primary market. Investopedia defines an initial public offering (IPO) as the first time a company sells its stock to the public. This is a way to raise money by issuing debt and it is only called IPO if the company have never issued equity to the public before. IPO is usually referred â€Å"going public† because company by selling portion