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    Initial Public Offering for Google and Morningstar

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    Hi, I need assistance completing the following questions. I am not too sure how to approach all of them.
    Initial public Offerings:
    1) What were the lessons learned from Google and Morningstar from their auction IPO's?
    2) What type of investors did AVG technology attract (http://www.avg.com/ca-en/homepage
    3) What are the advantages of each type of IPO (online and traditional)?
    4) The risks of each type (online and traditional) of IPO are?
    5) Identify success factors for a firm making the IPO decision.
    6) Describe the steps a firm must take in order to go public.
    7) Discuss and analyze the different types of IPO's.

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    Solution Preview

    Step 1:
    The lessons learned from Google and Morningstar from their auction IPO's are that online auctions work. They are more democratic and are effective in attracting small investors. Another lesson learned is that the auction of Google and Morningstar IPO helped eliminate high underwriting charges. It also freed the shares of the companies from large investment banks making allotments of shares. However, the IPO's were avoided by large institutional investors. Even though Google managed to attract a large number of investors because of its reputation and excellent financial results, Morningstar had difficulties in attracting institutional investors. Morgan Stanley, Deutsche Bank Securities and William Blair avoided a Morningstar deal.

    Step 2:
    AVG technology attracted mainly institutional investors. There were underwriters, institutional investors, and investment bankers. This was a traditional IPO. The fact that institutional investors were attracted is supported by the fact that when the shares began trading on the New York Stock exchange, their opening price was $13.53 which was 15% lower than its initial price of $16 which was at the low end of the IPO range of $16 to $18.

    Step 3:
    The advantages of the online method of auction are that the cost of underwriting is eliminated. Also, the high cost of an IPO road show is also eliminated. Moreover, the allocation of shares is more democratic. The allotment of shares is not controlled by financial ...

    Solution Summary

    This posting gives you a step-by-step explanation of Initial Public Offering. The response also contains the sources used.