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    Avaya IPO- Auction or Brokered?

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    Can you assist me on what type of IPO should Avaya use - a traditional IPO or an online auction?

    Based on your analysis and findings, what would you recommend to the executives of Avaya corporation?

    Please explain your reasoning in detail. Please include 2 references that I can revert back to for understanding and clarification.

    Some issues to consider in answering the above question include:

    i) The type of investors Avaya is likely to attract

    ii) The lessons learned from Google and Morningstar from their auction IPOs

    iii) Advantages of each type of IPO

    iv) Costs and risks of each type of IPO

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    Solution Preview

    I'll try and offer a framework for your paper, with a few example sections fleshed out as illustration.


    The competing model for an IPO is best represented by Google or, more recently, Morningstar. Morningstar went public through an auction-style offering in May 2005-the shares rose over 8% on the day, raising $141 million for the underwriting bank (Anonymous, 2005). Assuming that the auction-style offering fueled at least a portion of that intraday growth, it was a great idea for Morningstar to shun the traditional IPO and follow Google's lead. In the weeks to follow, Morningstar officials' secondary offerings certainly benefited from the boost in demand provided by allowing rank-and-file investors' access to the IPO. The real benefits for Morningstar, however, were not focused on the capital market.


    Public relations gain aside, the auction-style IPO represents a hands-off approach for Morningstar. This, along with the subsequent mob-rule potential, carries with it inherent risk for both investors, as well as the enterprise issuing the IPO. While a public auction type IPO seems egalitarian in nature, the allure of IPO access likely masks the inherent risks to the investor. Michelle Lowry, a finance professor at Pennsylvania State University explains, "with [established companies like] GE, you have thousands of ...

    Solution Summary

    Explores differences in types of Initial Public Offerings (auction-sytle, or traditional brokered) using Avaya as case study. APA format with references.