Initial Public Offering Research Paper Example | Topics and Well Written Essays - 1250 words

sign Public Offering - Research Paper ExampleUnderwriting firms assist the issuer in the initial public offering process by determining what type of security to sell to the public, how much to sell, and at what price to sell. One example of a large, strong private follow that sought to become public is Google, which first sold shares to the public on August 19, 2004 at a price of $1.67 billion, fewer than ten percent of the total shares of the company, which made employees at Google instant millionaires (Webb, 2004). Like Google, Twitter is another successful, sensitive internet company that faces the choice of whether to go public. However, the termination to go public is complicated by the issue of the method of selling those first shares to the public whether in an auction, online format like Google, or in a traditional format like other kinds of modernistic companies. Twitter is a microblogging service that allows users to post updates. It was founded by Evan Williams under the banner of Odeo (Carlson, 2011). When Apples new iTunes made the new product worthless, Evans and his friends Biz Stone and Jack Dorsey created the concept for Twitter. Together with Noah Glass, who developed the head for Odeo, development began on the new concept, which meant more employees, a new office, and investors. Glass developed the name Twttr that last evolved into Twitter. Five years after Odeos initial founding, $5 million in investments had increase in value by one thousand percent, to nearly $5 billion. Given Odeos (and straightaway Twitters) original context, it seems that the investor class most interested in the company are the kinds of analysts who were initially attracted to the counter of Google. Today, the investor class that might be interested in the public promise of Twitter may not be so different from those who were originally interested in the concept of Odeo. Nevertheless, Evan Williams bought back most of the ownership in Odeo before its share pr ices skyrocketed, which narrowed the original investment pool considerably. Some of those original investors, knowledgeable they missed a one thousand percent spike in prices, were part of the Silicon vale demographic that invest in the early stages of hot new internet companies with the next great idea. Considering the jump on that a privately held Twitter has made in its young history, it seems that the investors who might be interested in holding the company as public shareholders may belong to larger funds and investment beachers, instead than the relatively minor, private shareholders that Twitter was accustomed to appealing to in its younger days. Clearly, an IPO of a company such a Twitter, which has substantial private assets, would create a large splash in the cosmopolitan markets. Although the company may not be in critical need of financing for its short-term projects, an IPO would dramatically increase the market share of the company relative to its competitors. In the traditional IPO, an investment bank underwrites the issuance of shares to the public by determining the price and amount of shares to be dealt. The underwriter then shops the shares near to wealthy institutional investors based on their reception, the underwriter will allocate shares and collect a parting of the IPO. This method is incredibly effective because it happens primarily behind closed doors with entities that handle a considerable