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Book building IPO Method versus Auction Method

A firm can offer its securities to the highest bidder on a competitive offer basis, or it can negotiate directly with an underwriter. Please differentiate between the two methods.

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In America IPOs are typically performed using a book building method (firm can negotiate directly with an underwriter), where an investment bank is hired to ...

Solution Summary

The following two methods are differentiated:
1) A firm can offer its securities to the highest bidder on a competitive offer basis, or
2) It can negotiate directly with an underwriter.

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