Fin501 Case 1
Trident University International
Module 1 Case Assignment
FIN501: Strategic Corporate Finance
Dr. John Halstead
August 9, 2013
AVG Technology: Traditional IPO VS. Auction Based IPO Our nation has suffered through a recession for the past decade. Small and large businesses, alike, have suffered directly resulting in American jobs being lost, the national debt skyrocketing into the trillions, and parents struggling to keep food on the table for their children. Foresight is a trait that a business owners, or executives, must possess to lead their company in profitable times, and navigate through turbulent times. One of the most significant events in the life of any company is becoming publically traded; when a company “goes public.” AVG Technology recently became a publically traded company, and the way they did that was through a traditional initial public offering (IPO) which was the right decision. When companies want to go public they must attain an IPO; there are two types of IPOs which are traditional IPOs or a auction based IPOs. The purpose of an IPO is to raise capital which can be used for expansion or enhanced operation (essortment). A traditional IPO is accomplished by hiring an investment bank to write it. In this case the stock price and amount of shares are determined by the company and the investment bank; after the price is determined the company puts on a road show wherein investors are given the opportunity to commit to buy the stock at the predetermined price before it goes public (essortment). The fees of a traditional IPO can be significant,
“The investment bank collects a percentage of the IPO sale as commission, in addition to other fees charged to underwrite the IPO. These investors can then start trading the stock on the first open trading day” (essortment).
An auction based IPO is accomplished when a company advertises the shares on the internet to a larger investment pool; the company still has to hire an
Module 1 Case Assignment
FIN501: Strategic Corporate Finance
Dr. John Halstead
August 9, 2013
AVG Technology: Traditional IPO VS. Auction Based IPO Our nation has suffered through a recession for the past decade. Small and large businesses, alike, have suffered directly resulting in American jobs being lost, the national debt skyrocketing into the trillions, and parents struggling to keep food on the table for their children. Foresight is a trait that a business owners, or executives, must possess to lead their company in profitable times, and navigate through turbulent times. One of the most significant events in the life of any company is becoming publically traded; when a company “goes public.” AVG Technology recently became a publically traded company, and the way they did that was through a traditional initial public offering (IPO) which was the right decision. When companies want to go public they must attain an IPO; there are two types of IPOs which are traditional IPOs or a auction based IPOs. The purpose of an IPO is to raise capital which can be used for expansion or enhanced operation (essortment). A traditional IPO is accomplished by hiring an investment bank to write it. In this case the stock price and amount of shares are determined by the company and the investment bank; after the price is determined the company puts on a road show wherein investors are given the opportunity to commit to buy the stock at the predetermined price before it goes public (essortment). The fees of a traditional IPO can be significant,
“The investment bank collects a percentage of the IPO sale as commission, in addition to other fees charged to underwrite the IPO. These investors can then start trading the stock on the first open trading day” (essortment).
An auction based IPO is accomplished when a company advertises the shares on the internet to a larger investment pool; the company still has to hire an
References: AVG Technology. (2012). PROSPECTUS . Retrieved August 1, 2013, from nasdaq.com: http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=7997744 essortment. (n.d.). Traditional Ipo Vs. Auction-Based Ipo. Retrieved August 1, 2013, from essortment.com: http://www.essortment.com/traditional-ipo-vs-auction-based-ipo-24886.html Ibbotson, Sindelar, & Ritter. (n.d.). From Private to Publicly Traded Firm: The Initial Public Offering. Retrieved August 1, 2013, from nyu.edu: August 1, 2013, from ipoplanner.webzel.net: http://ipoplanner.webzel.net/faqs.html Weinberg, A