Companies which have the tendency to have oversubscription......its an additional expense (underwriter commission)....then why they will have an underwriter?
2007-01-18 03:41:29 · 1 answers · asked by Anonymous in Business & Finance ➔ Investing
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.
2007-01-18 04:04:26 · answer #1 · answered by NC 7 · 0⤊ 0⤋