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    What type of IPO should E-Bay use to take Skype public - a traditional IPO or an online auction?

    Some issues to consider in answering the above question include:

    A. The type of investors Skype likely to attract

    B. The lessons learned from Google and Morningstar from their auction IPOs

    C. Costs and risks of each type of IPO

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    Solution Preview

    The response addresses the queries posted in 1456 words with references.

    //This assignment is related to IPO issuing Method. In this assignment, we will see the advantages and disadvantages of a particular method of IPO, but first we will discuss about the company E-Bay and traditional and online auctioned based IPO systems. You are free for more additions. //

    About E-Bay

    It is a leading company in online business. The company has worldwide operations and deals in various consumer items. The satisfaction of customers is the main motto of the company. It provides a portal where anybody can sell and buy their products. Company has 88 million active customers spread around the world. Nowadays, the company is planning to invest in small business units for the purpose of business expansion. The E-Bay sells products worth $1900 per second, which signifies the worth of the company. It was founded by Pierre Omidyar in the year 1995. It was launched as an auction website and presents itself in 39 worldwide markets.

    Traditional IPO

    It is a very common method for IPO launching and most of the companies prefer this system, whenever a company needs to launch IPO for raising capital. In this system, an investment bank is hired by the launching company. It underwrites the IPO. Before launching the IPO, company and investment bank collect the data to analyze potentiality of the market. After that, company decides the price per share and how much share should be offered. The company and the bank decide a discounted price of share as compared to true value of the share (Lawrenc, 2002).

    After this process, company and investment banks engage in activities to attract potential investors. Investment bank prepares a road show, and with its help, it presents the offering to its large investors. Mainly the bank presents offering to its large institutional investors. The investors commit for buying a particular number of shares. It is not necessary that company allocates all the applicants. Investment bank gets sales commission on whatever sales it makes (Initial Public Offerings and Online IPO Auctions).

    //We have discussed above about traditional method of IPO. Now, we will discuss the auction based IPO System. We will see below what is an online auction based ...

    Solution Summary

    The response addresses the queries posted in 1456 words with references.