With the recent interest in IPOs, in part due to the high-anticipated Google
Initial Public Offering, I just thought I would correct some of the insights into Investment Banks.
1) We do not make fees of 7% on IPOs any more. Sure, that may have happened in 1999, but today fees are around 2 - 4%.
2) We do price the offering in order to give institutional clients a first day gain. We price it where the market can support it. If we were to overprice a stock, and it bombs in the first day, people lose confidence in both the bank and the stock.