Is it compulsory to have an underwriter for an IPO?
Yoshie asks:
Companies which have the tendency to have oversubscription……its an additional expense (underwriter commission)….then why they will have an underwriter?
Companies which have the tendency to have oversubscription……its an additional expense (underwriter commission)….then why they will have an underwriter?
Related questions:
- When I buy a stock, how does the money get to the company, if it does at all? Eura asks: As I understood it, when a company goes public they do their IPO. The underwriter pays the company...
- How can a small investor buy into an IPO from an underwriter before the stock reaches the trading floor? Kristina asks: Specifically interested in Switch and Data Inc ...
- Which IPO underwriter is the best? Marc asks: Morgan Stanley? Goldman Sachs? J.P. Morgain? or what? ...
- China Initial Public Offering and China Trading Activities Bernadine asks: Initial public offering (IPO), also referred to simply as a "public offering", is when a company issues common...
- Advantages of Going Public Through a Reverse Merger Velva asks: Dynasty Resources is your Gateway to business in China. Through partnerships with top companies, each specializing in a...
In an IPO, shares get listed on an exchange. Only a licensed broker can handle transactions conducted through the exchange. Basically, this means that you are in fact required to have an underwriter for an IPO. But even if you weren’t, you’d still want one. Someone other than the company has to give a valuation opinion. Someone has to actually sell the damn paper, preferably at a good price, which takes more than a song…
This said, some companies (especially smaller ones) find the costs of IPO (not just underwriters, but lawyers, accountants, and printers as well) prohibitively expensive and turn to private placements instead.