how does a company decide the price of a share at the time of an IPO?

Answer 1

Company has nor hand in fixing the price but the bankers, underwriters do have.
It depend upon the subscription of the shares.

Answer 2

Tim's correct but the company certainly has a say in the pricing although most rightfully defer to the underwriter's opinion. The pricing is set by the underwriter based on numerous factors including but not exclusive to: the overall health of the IPO environment, like companies that are currently trading in the market, recent pricing of IPOs for companies in the same industry etc.....There are different strategies as well depending on the analysis of the demand for shares...some times underwriters purposely under price the IPO for strategic reasons.....IPOs are a lot about hype getting the attention of large money managers to get behind the stock so while it often seems when a stock jumps at IPO that the underwriters left a lot of money on the table it's not necessarily so and often times is a conscious effort to create buzz for the company.

Answer 3

First of all it is the Underwriters who fix the price of an IPO. They compare your company who is taking the IPO route with other companies in the same industry who has stocks listed. This way they compare your size with those of other companies in the industry who are listed and many other financial factor which ultimately culminate in a price for your company. Usually IPO's are priced at par in Western economies. Some countries nowadays fix a premium on the par value which is likely done the way I have described.

Answer 4

the company doesnt decide it. the company hires bankers to underwrite the deal & they do an analysis & determine a fair price based on interest in the stock & market conditions, etc

Answer 5

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