What type of IPO should AVG use - a traditional IPO or an online auction? Based on your analysis and findings, what would you recommend to the executives of AVG? Please explain your reasoning in detail.
To answer the above question, please include responses to the following issues together with other issues that you think are important:
- The type of investors AVG is likely to attract
- The lessons learned from Google and Morningstar from their auction IPOs
- Advantages of each type of IPO
- Costs of each type of IPO (e.g., US Securities and Exchange Commission fees, stock brokers' commission, other fees, etc., but how much? Please provide numbers and ratios in the paper.)
- Risks of each type of IPO
- Identify success factors for a firm making the IPO decision
- Discuss and analyze the different types of IPOs
- Please give me enough information so I can complete a five page essay with references
Should AVG use a traditional IPO or an online auction?
The purpose of the initial public offering (IPO) is to sell stock of a company by raising capital for operations and growth. In a traditional IPO, the company will hire an investment bank to underwrite the IPO. The company and the investment bank will determine the value of the company through research and set a market range and IPO price per share. The company will pay the investment bank a fee and commission for their services. Also, the company and the investment bank will hold a road show to create excitement in the IPO. The road show is conducted for institutional investors and wealthy investors, who are the investment bank's top clients. After which, the company and investment bank will determine the number of shares to include in the IPO and know the confirmed commitments to purchase IPO shares. Most importantly, there is a share allocation of the IPO stock to the institutional and wealthy investors. Once the IPO begins, the institutional investors and wealthy investors own the stock at the lower IPO price. Once the stock trades at a higher price, only the institutional investors and wealthy investors will profit, which means only a small number of investors will profit.
In an auction based IPO, the internet is used to open the purchase of the IPO stock, which will allow for a larger number of investors in the stock. A company will still utilize an investment bank as an underwriter of the IPO. The company and the investment bank will determine the value of the company through research and set a market range and IPO price per share. The company will pay the investment bank a fee and commission for their services. Also, the company and the investment bank will hold a road show to create excitement in the IPO. The road show is conducted to educate large investors about the company. When the bidding begins, the bidder will enter their purchase price and number of shares into the bidding site.
The most common auction IPO format is the ...
The expert determines whether AVG should use a traditional IPO or an online auction.