Initial Public offerings Paper

Initial Public Offerings

FIN/370

Richard Tappe

Facebook, Visa, and General Motors are the only U.S. based companies who are among the top ten global IPOs across the globe (Zucchi, 2015). China is dominating the top ten global IPOs. An initial public offering, commonly known as an IPO, is the process of selling corporate shares in an open stock exchange for the first time. What is an investment banker or underwriter are just a few questions, and others that will be discussed to inform better a person on the importance of an IPO and how it affects the global market?

Roles

The underwriter is usually an investment bank that employs IPO, specialists. These bankers ensure that the firm satisfies all regulatory requirements, such as filing with the appropriate bodies and depositing all fees, and makes all mandatory financial data available to the public (Ozysar, 2015).  Secondly, the most important job of the underwriter is to contact investors who have large sums money to purchase stock such as mutual funds.  The underwriter will recommend IPO price to these firms to sell the shares. The underwriter must ensure the price is neither too high nor low.  During the IPO process, the underwriter usually provides a guarantee to firms to sell a specific quantity of stock during the IPO process (Ozysar, 2015). If prospective buyers do not buy the shares, the underwriter must buy these shares and sell on the open market. Once again pricing is important.

According to Investment Banker (2015), "An investment banker serves as a facilitator between a company and investors when the company wants to issue stock or bonds. The investment banker assists with pricing financial instruments so as to maximize revenue and with navigating regulatory requirements”. During the IPO process, the investment banker may buy all or most of the shares direct from the company. Next the shares are sold on the market; the investment banker must "price" the shares adequately.

Initial Public Offerings

The development of creating a home mortgage or home loan in known as an originating house. The originating operation has a borrower submit different types of financial information to the lender. This information can include paycheck stubs, tax returns, and personal bank information. The lender then takes the information and decides what type of loan the borrower will qualify for. The lender relies heavily on the borrower’s credit to decide the loan eligibility (Narayanan, Rangan, & Rangan 2004). A syndicate is a financial service body developed to handle a hefty transaction that would be difficult or inconceivable for the business people to handle alone. Syndication enables companies to gather their finances and share the risks affiliated with the transactions (Narayanan, Rangan, & Rangan, 2004).