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Unformatted text preview: FIN 461
Corporate finance (advisory & underwriting)
Sales: retail brokers and institutional
Trading: equity, securities, etc.
Research: equity and security research, FI anaylsts
Why IB: repeated game
Equity underwriting : IPOs, etc.
US Bond: FI
Firm commitment offering: Firm IB Market
Bests efforts offering: Issuer/IB Market
Best effort: IB does not buy securities, get a rate for helping sell securities to market
Most speculative offerings tend to be firm commitment . . .I assume because locks in $$
raised by issuer
Material transaction (M & A) 8k
Security Issuance: prospectus …424B4 (IPO) always 424**
Tender Offers: 13d; 14d individuals or institutions that breach certain thresholds…taking
a 5%+ stake in a firm. Prevents people from slowly building large stake instead of
surprising other shareholders
Graham-Leach-Bliley of 1999 over turned Glass-Steagal. De-regulated in-order for
domestic IB’s to compete with global …allowed global Ibs to be created
Sab-Ox tries to put wall between IB activities and research
IB get a 7% cut on IPO deals
GM IPO’s were bellowed 7% fee rate….near 2%
When very large, like Visa and Mastercard, closer to 4%
Money does not come form the IPO, almost like a loss leader, get their business forever is
the idea ...
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This document was uploaded on 11/02/2011 for the course FIN 461 at Miami University.
- Fall '11
- Corporate Finance