Google Considering Dutch Auction For IPO; Investment Bankers Crying

from the sorry-about-that... dept

New banking firms like WR Hambrecht have been pushing the idea of the "Dutch Auction IPO" where instead of having a bunch of greedy investment bankers setting the price of your IPO (and, of course, pricing it below the real market price to guarantee a first day pop that the press likes so much - even though it means lost money to the company) you let everyone and anyone bid on how much they want to pay, and then set the actual IPO price based on the highest price where all of your shares will sell out. For years, this option has been around, but most companies have been afraid to try it out, believing (perhaps correctly) that they needed big name investment bankers touting the stock to guarantee that it got enough attention from the financial community. Google, of course, doesn't have that problem. Everyone has been drooling over the concept of a Google IPO for ages, so they don't necessarily need the same support of a big time underwriter. So, it's no surprise to hear that they're at least considering the idea of a Dutch auction IPO sometime early next year. It does fit with Google's general nature, and could do wonders for those who believe in Dutch auctions as a much more equitable way of doing an IPO. Chances are it would make Google a lot more money, too, since it would cut their underwriting costs, and make sure that the deal wasn't underpriced - meaning Google gets the money that otherwise would have been thrown away to those flipping the stock on the first day. Still, the investment banks wooing Google probably are scared of this idea (they'll make less money, and won't be able to give their "friends" the favors they surely want) and will try to do whatever they can to convince them otherwise.
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    W, 1 Jan 2004 @ 9:56pm

    Re: Google and an OpenIPO

    you don't know what you're talking about.
    having a dutch auction IPO guarantees a fair price for the stock, eliminates money left on the table and therefore decreases flipping. it also is less expensive for the company going public.
    this makes perfect sense for google, who is already a household name, and does not need the backing of a large investment bank.
    google would not be "screwing the little guy" nor would it be "taking the money and running" as you suggested. it would only be taking the money people think its stock is worth, their bids, which would result into a fair market price.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Discord

The latest chatter on the Techdirt Insider Discord channel...

Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.