Читать книгу Investment Banking For Dummies - Matthew Krantz - Страница 52

Investment bankers are involved in the very onset of a company going public, and they’re the keys to making the deal happen. When investment bankers assume the role of selling securities, especially in an IPO, they’re often called the underwriters.

A typical IPO usually follows these steps:

1 The company produces information about its stock sale.The company must give investors an extremely detailed outline of its opportunities, financial results, and risks. This filing is called the prospectus. Investment bankers assist in making sure the company includes all the material information investors need to know about the offering. You’ll learn more about what’s in the prospectus in Chapter 4.

2 The company takes its story to the streets.If companies are going to ask investors to pony up millions of dollars for the company, they’re going to have to convince them to buy. That’s the role of the roadshow. Roadshows are events and meetings investment bankers arrange between companies selling stock and prospective investors.

3 The investment bankers gather up the investors in the book-building process.The traditional IPO is a process shrouded in a bit of secrecy. During the roadshows, investment bankers get an idea of how likely it is for specific investors to buy stock, how many shares, and at what price. The investment bankers record this indicated interest, or general idea of how much buyers want to invest, to gauge how many shares are likely to be bought when the IPO is sold. This process of tallying up how much interest there is in the stock is called book building. The book-building process is critical because it tells the investment banks selling the deal at what price the shares should be sold.

4 Underwriters price the deal.Underwriters typically work late into the night before the stock starts to trade, assembling all the orders of investors. The underwriters look at all the orders for the stock and at what prices investors are interested. The underwriters then find the highest possible price at which all the shares would sell. The IPO is priced, or the initial price charged to these initial investors is set.

5 Underwriters support the IPO.The initial price of the new stock is set by the investment bankers the night before, and all the shares are sold to the initial investors. The initial investors in IPOs are typically the friends and business partners of the underwriting firms. For instance, large institutions that use the investment bank’s other services are often given access to IPOs, as are wealthy individuals that may be clients of the investment banks.After the deal is priced, these initial investors are free to sell on the open market, in what’s called aftermarket trading. And it’s during the first day of regular trading when regular investors, customers of brokerages like TD Ameritrade and Charles Schwab of the world, are able to buy the stock.