ipo_val - Initial Public Offerings Process of Going Public...

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Initial Public Offerings
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2 Process of Going Public Engaging an Underwriter Choosing an Underwriting Contract Pricing the IPO Offering Offering cancelled Finalized or postponed.
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3 Underwriting Contracts Firm commitment (for most offerings). Best efforts (fixed price offerings). Online auction. (W. R. Hambrecht; and Friedman Billings Ramsey Group).
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4 Major Underwriters: Goldman Sachs Morgan Stanley Dean Witter Merrill Lynch Donaldson, Lufkin & Jenrette JP Morgan Salomon Smith Barney Lehman Brothers Bear, Stearns Chase Manhattan UBS Credit Suisse First Boston Deutsche bank William Blaire & Company
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5 Pricing IPOs (firm commitment contracts) Preliminary Prospectus filed with the SEC Road show Offering finalized. Tentative range of price Building order book from investors final offer price
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6 Eric A. Benhamou, Chairman, Carl J. Yankowski, Chief Executive Officer, Palm, Inc. opened The Nasdaq Stock Market on Thursday, March 2, 2000, at Nasdaq's MarketSite in New York City to commemorate their IPO listing.
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7 Palm Inc. (2-month price chart)
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8 Why IPOs are Underpriced? Investors: Mr. Smart Mr. Average offer price for IPOs price > value: price < value: winner’s curse
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9 IPO Market (Internet Bubble) 1974-1998 price of only 39 IPOs doubled on the first day of trading. 1999 price of only 117 IPOs doubled on the first day of trading.
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10 A Few Examples (Internet Bubble) Firm Sales Offer Price First Close Price (10/26/2001) EToys 34.7 MM $20 $76.6 - Ariba 23.5 MM $23 $90 $3.54 Webvan Group 0.4 MM $15 $24.9 - Priceline.com 35.2 MM $16 $69 $4.34 Akamai Technology 1.3 MM $26 $145.2 $3.5
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11 IPO Scandals
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ipo_val - Initial Public Offerings Process of Going Public...

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