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Financing Issues that Google Faced When it Went Public

Give an example of when Google had an initial public offering, in the past three years, which address the following: Cost of issuance.

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Minimizing offer-to-open price appreciation is important because the preferred clients of the investment banks, who were initially allocated shares of the IPO under the traditional process, are the beneficiaries of the price increase, rather than the issuing company. Consequently, from the perspective of the issuing company, the increase between the offer price and the open price represents "money left on the table." The development of the Dutch auction process, used in Google's IPO, represents one of the most recent of the attempts to efficiently price IPOs by setting a sufficiently accurate offer price that the offer-to-open price increase and any substantial, immediate price appreciation in the absence of news are minimized. This would result in the issuer receiving proceeds that are a more accurate reflection of the economic value of the firm.

However, the performance of Google, which debuted using the online auction process in August, 2004, does not suggest that the ...

Solution Summary

In 619 words with reference, this solution discusses cost of issuance when Google had an initial public offering.