Reading: IPO Mechanics

Now that we have seen the financial mechanics of an IPO, we can take a closer look at two important questions or extensions:
 

• Who actually pays the underpricing (of 15%)?
   
• Why would firms choose such an expensive route to raise capital (total costs equal to >23% of gross proceeds)?
   

The following sub-sections take a closer look at these questions, using the Online Tool "IPO Analytics" for simplicity.