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Investors and IPO for Second Life

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After doing some research both on Second Life and on online auction IPOs, write a four to five page paper answering the following question:
What type of IPO should Second Life use - a traditional IPO or an online auction?
In your paper you should consider the following issues:
A. The type of investors Second Life is 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 Summary

The response address the queries posted in 1672 words with references.

Solution Preview

The response address the queries posted in 1672 words with references.

//Prior to talking about types of IPO i.e. 'Traditional IPO' or 'Online Auction IPO' should be used by Second Life; we will have to first of all, gain knowledge about Second Life. So, initially, we will write about Second Life under the heading of Introduction, for example: //

Introduction:

The occupants established Second Life as a free online virtual world thought. Through free 3D virtual world; individuals are enable to meet people, associate and create applying text and voice chat. When we enter into Second Life, we will find out, a fast-growing digital world that comprises of experiences, individuals, amusement, and chance. Through Second Life, it will be easy for the Residents to research, entertain, take participation in various activities, meet other occupants, traveling all over the world and merchandise virtual property and services with each other (SecondLife, 2009).

//Above, we talked about Second life, which is free 3D virtual world thought. As per directions; in this part, we will talk about type of IPO that should be used by Second Life. In this part, we will also briefly discuss about both types of IPO to raise your knowledge. You are free to add more in this part, which you find suitable. I am just providing you a brief overview.//

Traditional IPO or Online auction IPO:

In the traditional IPO, investment bank is employed by a company for the purpose of insuring. Afterwards, both inquire about a company's probably market value. On the basis of probable market value, the company wants to raise the capital amount in the IPO and also finds out the number of shares, which will be proposed and price, per share. On the other hand, Online

Auction IPOs apply the 'Computer network', in order to spread out the purchase of IPO stock to the large number of prospective stakeholders or capitalists (Traditional ipo vs. auction-based ipo, 2002).

Second Life should go for the 'online auction IPO' because with the help of this type of IPO, it will be able to target small investors or long term investors, who are very much concerned with the company's success. This type of IPO also understates the traditional potency of larger investors pertaining to the business institutions (Sherman, 2005). It is an easy way for the Second Life to raise funds because of its feature of free 3D virtual world thought.

Besides that, in Online Auction IPO, there is lesser investigation of insurers and cost is also compartively lower, as compared to the traditional IPO and it renders the better value to its issuer. In addition to this, this type of IPO can be fascinating to Second Life because of the lesser fixed ...

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Ashish Sharma, MBA (IP)
Education
  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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