IPOs And Secondaries, A close look

Two things have been happening a lot lately, IPO’s and “secondaries” and since we’ve got a lot of new people reading the publication I thought I might want to visit secondaries for a moment. Most people understand the idea of an IPO, but a secondary often gets them a bit confused.

A secondary offering occurs when a company literally releases more stock out into the float. But some interesting things usually take place when that happens. Let's look: In general terms when a secondary is announced the stock will fall like a rock for a day or so. Why? Well, basically they are saying, "We are putting more shares out there" and that has the undesirable effect of "dilution." So more times than not when a secondary is announced, that stock takes a tumble.

Now, why do they do secondaries? For a number of reasons. First, they want money. The money is generally slated for some type of expansion project or even hopes of an acquisition. Then they also do them to put more shares out for institutions to buy. Some institutional buyers will actually approach management and say, "Hey we would like to take a stake in you but you don't have enough shares for our liking." Many companies want the exposure that institutional buying brings and will do the secondary. Sometimes it is done to allow insiders a chance to sell their shares too. (That isn't too widely done but it happens) So what does all this mean for us? It means that there is a good chance the stock will take a near term hit. BUT it also means the stock will probably be a good buy again shortly afterwards. Here is why: When a secondary is to be done, there are underwriters involved in marketing that stock just like when the stock first came public.

Those underwriters are going to want to see the stock price move higher after the offering (so they can make some money) and will put on a "road show." That just means they will hype the stock trying to get buyers attracted to it and get the price moving up again. The moral of the story is that when a good solid company that is growing does a secondary offering, we can often get the chance to get into that company at a reduced price. The rebound in the share price can often be dramatic, often running well past the price when the secondary was announced.

Many times big buyers from institutions are waiting in the wings for the effects of the secondary to drive the stock's price down so they can get in it. All that buying, along with the underwriters "road show" can rebound those shares quickly. So, when you hear a company announce they are doing a secondary offering, look for the expected sell off, but watch that stock closely right after it actually executes the sales. Chances are good that in a short period of time they will be moving higher!

PS. We only like to see secondaries in "decent companies." A no name company that trades no volume is not a good candidate.

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IPO and Tax Planning

The only way to keep up with the latest about IPO and Tax Planning is to constantly stay on the lookout for new information. If you read everything you find about IPO and Tax Planning, it won't take long for you to become an influential authority.
Those of you not familiar with the latest on IPO and Tax Planning now have at least a basic understanding. But there's more to come.
Tax planning forms an important part of almost every business transaction or investment decision. When an IPO is considering how to structure a transaction involving securities, or is undertaking a major financial strategy, tax advice may considerably impact the final decision. Both from the point of view of the investors and issuing companies IPO and Tax Planning is of great significance as it implies the profit of the issuers, investors as well as underwriters. There are a number of investment banking firms who offer a number of services to IPOs which are related to tax planning. This article discusses important points regarding IPO and Tax Planning. Compared to other sources of financing IPOs provide a number of advantages and with proper tax planning both investor and the company can reap many tax benefits.
Most investment banking firms have a tax department who are engaged in ongoing research, planning and consulting services for several IPOs across the world. With the combination of technical skills and creativity the various tax professionals hired by an IPO helps clients to survive and prosper in an increasingly competitive environment. When a company plans an IPO it employs tax planners and lead managers to help it in making the right decision about the price at which the shares should be issued. The price of an IPO can be determined in two ways. Firstly either the company with the assistance of its tax planners fixes a price or secondly the price is determined through the process of book building. Tax planning in IPOs involves project assessment, project planning and preparation, pricing, project documentation and settlement.
IPO and Tax Planning is an important subject from the view point of reducing the risk factors involved in small companies planning an IPO. The decision of a company to go public through an Initial Public Offering involves a complicated and time-consuming process which is full of risks and hurdles. The innumerable issues and problems that must be addressed to accomplish a successful offering require the expertise of an experienced advisor in matters of tax planning and taking other important decisions. The number of IPOs across the globe includes 3i Infotech, ABG Shipyard, Accel Frontline, Action Const, Advanta, AIA Engineering, Allcargo Global, Allied Computer, Allied Digital, ALLSEC Tech, Alpa Laboratori and several others. All these IPOs have attained success through meticulous tax planning which have helped them to reap maximum profits.
Take time to consider the points presented above. What you learn may help you overcome your hesitation to take action.

IPO Advisers help IPO Planning

The more you understand about any subject, the more interesting it becomes. As you read this article you'll find that the subject of IPO Advisers is certainly no exception.

Most of this information comes straight from the IPO Advisers pros. Careful reading to the end virtually guarantees that you'll know what they know.

Over the centuries a number of companies have came forth as giant organizations after starting their operations as small enterprises. The need for a company to survive and grow induces it to make several decisions. One of them is definitely that whether or not the company will go to the public. In other words whether the company will consider to offer its shares to the public to generate substantial amount of funds. To enter the primary market, initial public offering is made where the shares of the company are offered to the public for the first time and there after the trading of the company's shares take place in the secondary market (commonly known as the stock market). The role of the IPO advisers is quite crucial in the point of view of the firm venturing in the primary market.
The roles played by the IPO advisers are of immense importance as they give a detailed SWOT analysis of the company and thus help them before they go to the public. The strength of the company is decided on various factors, like: the strategies implemented by the company to get hold of significant portion of market shares, the research and developmental activities, the unique selling propositions of the firm, corporate culture maintained in the company. The weakness of the company is decided on the factors that might hamper the growth of the company, be it saturation stage of any product or service, technological weaknesses, weak distribution network etc. IPO advisors see that what are the external and internal threats that the company might face if it goes for the initial public offering.

The external threats could be from the competitors, the market scenario and various other factors. IPO advisers also give a descriptive analysis about the opportunities that the companies might have after making the offer. There could be more funds for future acquisitions and sufficient liquidity for the management to enhance the growth of the company by going for diversification in the future. IPO advisers also give the companies a clear idea about the revenue generation and profitability expectations by considering all the constraints prevailing in the market.

IPO advisers also helps the company in corporate communication activities and that might include all the promotional campaigns related to the initial public offering. Before appointing an IPO adviser the company usually goes through the presentations of several IPO advisers. The IPO advisers bid for the project and based upon the bids that they have made and studying their analysis, the management of the company finally selects the one they consider that would fit into their requirements. There are numerous IPO advisers prevailing that are considered as the best in the business world, like: HSBC Securities, Citibank, J M Morgan Stanley, DSP Merill Lynch etc. There are even some cases where two or more IPO advisers jointly work in collaborations.

That's how things stand right now. Keep in mind that any subject can change over time, so be sure you keep up with the latest news.

IPO planning-auction and Pricing

In today's world, it seems that almost any topic is open for debate. While I was gathering facts for this article, I was quite surprised to find some of the issues I thought were settled are actually still being openly discussed.

If you don't have accurate details regarding IPO planning-auction and Pricing, then you might make a bad choice on the subject. Don't let that happen: keep reading.

Auction
IPO, the abbreviation of Initial Public Offering is name given to the first offer for selling stock to the public done by a private company or corporation. Mostly, IPOs are issued by younger, smaller private companies who look for capital for expansion purposes. Large private companies can also issue IPOs in order to become publicly traded companies. In case of an Initial Public Offering, the company that issues IPOs may try and obtain the aid of an underwriting firm that acts as a helper in determining which type of security needs to be issued (if common or preferred), the time of IPO introduction in the market, and the best IPO offering price.

IPO purchasing is quite a risky type of investment. Those investors who fall in the group of individual investor, it becomes truly tough to predict what the stock will be resulting to on the initial trading day and in the future days. For this reason it requires brief historical data about the company for analysis purpose. In this page we will inform you about the role played by auction in IPOs. Keep scrolling to know more about IPO auction.

Bill Hambrecht, a venture capitalist tried to formulate that can reduce the traditional inefficient process of auction. According to the methods of the traditional IPO auction, the public sales of IPOs are made to the highest bidder. Bill Hambrecht prepared a way regarding the issue of IPO shares by a Dutch auction. This was just an attempt in order to minimize the heavy under-pricing mainly nurtured by underwriters. However, the investment banks mostly playing the role of the underwriters failed to adopt this Dutch auction strategy of IPOs effectively. Amongst the various companies using Dutch auction strategy of IPO, Google is one of the most established companies that became public by the use of auction. Right on the very first day of trading, Google’s share price rose upto 17% despite the use of the Dutch auction method.

Perception of IPOs is really a controversial issue. Those issuers and investors who view a successful IPO only as a means of making money as much as possible, the concept of IPO proved to be a complete failure to them. Those who consider a successful IPO from the perspective of the kind of investors that sooner or later made profit from under-pricing, the concept of IPO to them became a complete success. One should keep it in mind while going for an IPO auction that there are different sets of investors who bid in an auction. There are more institutional biddings, and very little individual bidding. The use of Internet in the IPO auction process is making the entire process quite easy and a fairer method of selling shares. This is the specialty of Dutch auction of IPO.

Pricing:
pricing of IPOs which is a very important aspect of issuing IPOs. The pricing of IPO should be made by the issuer in such a way that it goes along with the market prices of other companies IPOs, as well as the pricing should not be so much that it becomes a difficult task for investors to purchase the stock. Moreover, the IPO pricing must also bring profit to the issuing company. This is the reason why pricing of IPOs is an important issue from both the perspectives of the issuing company and the individual investors.

Apart from analyzing the best IPO introduction time in the market, and what type of security should the IPO cover, what will be the price of IPO is also very important. The IPOs should not be overpriced or under-priced.

Historically, both the US and global IPOs have been under-priced. The reason why underpricing of an IPO is done by the issuer is for generating additional interest among the investors in the stock when it becomes publicly traded for the first time. This sometime leads to significant gain in part of the investors who were distributed IPO shares at a certain offering price. Nevertheless, IPO underpricing effects in too much of pop and loss of value, that implies lost capital that might have been raised for the profit of the company or issuer if the stock had been issued and offered at a higher price to the buyers or investors. So, while deciding on the pricing of an IPO, care must be taken so as to avoid underpricing.

To escape the effects of underpricing, the issuers must also not implement overpricing of an IPO. The danger of overpricing of IPO is also of great consideration for companies issuing IPOs. If an IPO is issued in the market for public at a comparatively higher price than what should be paid by the market, the underwriters (mostly investment banks) may face troubles in meeting their commitments in selling the issuer’s shares. Even if the underwriters are able to sell all of the issued shares in the market, if a fall in value of the stock takes place on the first trading day, then it may result to the shares loss of marketability that further results in the loss of the value of an IPO.

The IPO issuing company appoints lead managers who help in deciding an appropriate price of issuing the shares or IPOs. There are two ways of determining the price of an IPO, they are: either the price of the IPO is decided through the book building process; or the price of the IPO is decided by the issuing company with the assistance of its lead managers.

That's the latest from the IPO planning-auction and Pricing authorities. Once you're familiar with these ideas, you'll be ready to move to the next level.

Business Cycle Of IPO Planning

This informative article should help you focus on the central points on IPO planning business cycle.

The more authentic information about Business Cycle Of IPO Planning you know, the more likely people are to consider you a Business Cycle Of IPO Planning expert. Read on for even more Business Cycle Of IPO Planning facts that you can share.

An Initial Public Offering or IPO implies a private company or corporation’s first sale of stock to the public. Mostly smaller, young companies sell IPOs for expanding their capital, sometimes large private companies also sell IPOs for becoming publicly traded. If an individual is going to buy IPOs then he must be aware of certain facts about the IPOs offered by particular companies. Some of the important facts to be known about IPOs are: reasons for listing, procedure, auction, business cycle, pricing, etc.
In this page we are going to inform you about the business cycle of IPOs. Keep scrolling to collect information on IPO business cycle.

In the United States, at the time of the late 1990s dot-com bubble, several venture driven capital companies started their operation. These companies were in the move of seeking cash in on the share market, so they offered quick IPOs. In most cases, the stock price climbed upwards when a company became public, and investors tried to get in at the starting point of the next potential companies like Netscape and Microsoft. The initial founders often started becoming overnight millionaires, and because of the ample options in stock, employees got the opportunity to make a great deal of money also. Almost all IPOs are found on the Nasdaq stock exchange where companies are listed in relation to information and computer technology. Nevertheless, despite of the vast amounts of financial resources that are made obtainable to comparatively young and inexperienced firms (mostly in multiple financing rounds), the huge majority of these firms quickly entered financial crunch. This crisis mostly took place in the case of those firms where the team of founders liquidated a major part of their stake in the firm at or shortly after the release of the IPOs.

The phenomenon of IPO business cycle was never limited only to the United States. For instance, in Japan a similar type of situation once took place. In this situation some companies were having their operation in such a way that having an IPO was their prime aim. Some special stock exchanges were established for those particular companies, like Nasdaq Japan. Possibly the clearest strategies of business cycle in the history of booming IPO markets since 1929 was when closed-end fund IPOs were sold at large premiums to the net value of assets. In the year 1989, the closed-end IPOs belonging to the country fund were sold at tremendous premiums to net asset value. The reason why these schemes and strategies became so clear was the ability of comparing market prices for shares regarding the closed-end funds to the share values in the portfolio of funds.

Now that wasn't hard at all, was it? And you've earned a wealth of knowledge, just from taking some time to study an expert's word on Business Cycle Of IPO Planning.

IPO-procedures & reasons for listing

Knowing enough about IPO to make solid, informed choices cuts down on the fear factor. The article below describes the reasons and procedures for listing IPO

There are many procedures for listing Initial Public Offering (IPO) and normally involve one or more investment banks as ‘underwriters’. The issuer is the company offering its shares, who enters into a contract with a lead underwriter to sell its shares to the public. This is followed by the underwriter approaching investors with offers to sell these shares. In order to apply for IPOs you need to have a demat account or else your application will be rejected. IPOs are generally expansively advertised through newspapers, television commercials and on radio as well.
This is because not only is it statutorily required but also companies want utmost publicity to make sure that their issues are known to the largest section of people to gain success. The procedure and planning that goes into preparing a company to go public takes several months.

It is an extensive procedure which involves assembling a board of directors, auditing accounts for accuracy, hiring consultants and advisers, and contracting a financial printer. The procedure for IPOs cannot happen without having these professionals take center stage. The most important person in the entire IPO process is probably the underwriter who is an investment banker. They have the right distribution channels and business community contacts through which they are able to get a company's shares to the right investors. Underwriters are also involved in helping set the initial offering price for the stocks and creating interest for the stock. They further assist in creating the brochure with important details of the company so as to allure potential investors.

After the prospectus or brochure has been drafted, it is assessed by the Securities and Exchange Commission (SEC). Upon approval by the SEC an extensive promotion campaign is arranged in major cities to attract potential investors. A big IPO is generally underwritten by an association of investment banks with one lead underwriter. On the basis of the percentage of the value of the shares sold the underwriters gets a commission. The lead underwriters, who sell the largest proportions of the IPO, get the highest commissions sometime up to 8%. Typically, the lead underwriter in the primary selling group is also the lead bank among the other selling groups.

Due to the large number of legalities involved IPOs usually hire one or more law firms with major practices in securities law. The procedure includes issuing new shares for raising new capital, and secondary sale of existing shares. Initial Public offerings are mainly sold to institutional investors, although some shares are also sold to the retail investors of the underwriter. In the process of selling shares of IPOs a broker is paid through a sales credit and not a commission.


Before discussing the reasons for listing by an IPO, let us first understand the basic concept of an IPO. Initial Public Offering or IPO is defined as the first sale of stock by a private company to the public. When a new company or an existing company but without any shares listed on the stock exchange invites the public to buy shares, it is known as Initial Public Offering or IPO. More often IPOs are issued by small and new companies looking for capital to expand their businesses. However IPOs can also be issued by large privately-owned businesses looking to become publicly traded.
There are a number of reasons for listing shares on the public exchange by various companies. Since it is the first time the company is approaching the public for money it also sometimes known as “going public”.

Seeking capital is one of the primary reasons for listing shares by new and existing companies. Every company requires funds to develop and expand its infrastructure through purchase of new machinery, land or even repay its loans. This is achieved by listing shares in the Stock exchange for the public to buy. When a corporation lists its shares on a public exchange, it will always look to issue additional new shares so as to raise more capital simultaneously. The company gets the money paid by investors for the newly-issued shares. Purchasing shares from the primary market suggest that the buyer buys them directly from companies when they issue new shares or come out with IPOs.

Another reason for listing is that it allows a company to find a large group of stock market investors to provide IPOs with large volumes of capital for future expansion. The company that issues new shares or offer IPOs is not required to pay back the capital, and instead the new shareholders have a right to future profits distributed by the company. The current shareholders of a company will see their shareholdings diluted as a percentage of the shares of the company. However, the reason the shareholders invest is because they expect that the capital investment will make their shareholdings more valuable in absolute terms. In addition, the other listing reason is that the company will be able to issue more shares through a rights issue, thus attaining capital for expansion without incurring any debt.

The ability to increase huge capital from the general market is a rather good enough reason for listing. Instead of having to seek and negotiate with individual investors, listing company shares is a great way to help a company grow and expand without getting into any debts. Usually companies going through a transitory growth period offer IPOs in the stock exchange.

If you apply what you've just learned about IPO, you should have nothing to worry about.

IPO-Initial Public Offering

IPO is the abbreviation of Initial Public Offering which implies the first offer for selling stock by a private company or corporation to the public. IPOs are mostly issued by younger, smaller companies who seek capital for expanding. IPOs can also be issued by those large private companies in attempt for becoming publicly traded. In case of an Initial Public Offering, the issuing company may seek and obtain the help of an underwriting firm that helps in determining what type of security is to be issued (whether common or preferred), the time of introducing the IPO in the market, and the best price to offer the IPO.

IPO is also sometimes referred to as public offering. Investing by buying IPO is quite a risky investment. For those investors who fall in the category of individual investor, it becomes difficult to predict what the stock will be doing on the initial trading day and in the coming days. This often requires little historical data about the company in order to analyze the company.

Almost all IPOs are offered by those companies which are passing through a transitory growing phase. For this reason the IPOs are subjected to additional uncertainty about their future value. A company while goes for issuing IPOs needs to list its shares on a public exchange. This is known as a company’s reasons for listing. The company looks for issuing extra new shares so as to raise additional capital simultaneously. Once a company gets listed, it can issue additional shares by using the rights issue, thus again offering capital to the company for expansion, free from falling prey to any types of debts. For knowing more on listing reasons about IPOs, then check our page on Reasons for Listing.

The procedure of IPOs usually takes one or more investment banks in the role of “underwriters”. Those companies who offer their shares are called as the “issuer” and they enter a contract along with a lead underwriter for selling its shares to the public. Then the underwriter goes to the investors with selling offers of the shares. There are basically five common methods in which the sale of the shares can take place. The page on IPO Procedure will enhance your knowledge more on the selling procedure of IPOs. In case of large IPOs a “syndicate” of investment banks is mostly the underwriter. Multinational IPOs can have even three syndicates for dealing with different types of legal needs in the domestic market of the issuer as well as in other areas.

The other important steps involved in IPOs and their selling are: Business Cycle, Auction, and Pricing. According to the history of IPO, there are two time windows that are commonly referred to as “quiet periods”. These periods were of great significance in IPO history.