CEOs and CFOs on IPOs: The Process and Success of Going Public
35 Pages Posted: 1 Mar 2016 Last revised: 16 Nov 2017
Date Written: July 1, 2017
We conducted 46 interviews with CEOs and CFOs who were closely involved in an Initial Public Offering (IPO) in the Netherlands. Among other things, we find that pre-existing relationships are a primary consideration in the selection of the lead manager and other syndicate members. Pre-marketing feedback figures prominently throughout the pricing process. The width of the price range of book-built IPOs is especially driven by valuation uncertainty. There is evidence of strategic underpricing in anticipation of subsequent equity issues and because of management’s interest in satisfying new shareholders. Many interviewees believe that the lead manager’s business interests have had a strong influence on the allocation of shares. Managerial perceptions of IPO success are largely driven by how well the firm fared in terms of stock price performance, changes in media attention and visibility, and changes related to the retention and recruitment of staff.
Keywords: initial public offering, survey, going public, IPO process, IPO success, valuation, lead manager, syndicate, pre-marketing, book building
JEL Classification: G30, G32, G34
Suggested Citation: Suggested Citation