Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from essay:
Business -- Corporate Finance -- IPO for AVG
What type of IPO should AVG use -- a traditional IPO or an online auction? Based on your analysis and findings, what would you recommend to the executives of AVG? Explain your reasoning in detail.
AVG Technologies N.V. is a "consumer-focused IT security" company seeking to "simplify, optimize and secure" the Internet for its users (AVG Technologies, 2013). Founded in 1991 and based in Amsterdam, AVG has aggressively acquiring other companies such as Ewido, Exploit Prevention Labs, Sana Security, Visionize, DroidSecurity, TuneUp, Bsecure, Ookla, and OpenInstall (AVG Technologies, 2013). On February 1, 2012, AVG announced its IPO of 8 million ordinary shares -- 4 million from the company and 4 million from shareholders - @ $16.00/share, to begin trading on the NYSE on February 2, 2012 (AVG Technologies, 2012). Following SEC procedures, AVG filed a Registration Statement with the SEC, which the SEC declared effective (SEC Office of Investor Education and Advocacy, 2013), and the offering was made only by a prospectus (AVG Technologies, 2012). The offering's bookrunning managers were Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Goldman, Sachs & Co., and its co-managers were Allen & Company LLC, Cowen and Company, LLC and JMP Securities LLC (AVG Technologies, 2012).
Given the company's hi-tech nature, aggressive and successful history and current prospects for continuing global expansion, it is likely to attract large institutional investors such as hedge funds and other top clients of large investment banks, in addition to small and even individual investors. On balance, it appears that AVG would benefit most from the traditional IPO process rather than auction-based IPO (Clinton, 2011). First, a traditional IPO enjoys the support of traditional investment banks and other large, established Wall Street investors (and therefore less financial risk in that aspect), which Morningstar and Google forfeited by going the nontraditional auction-based IPO in order to enjoy the advantage of "democratically" reaching millions of small investors (Carter Chalk, 2005). Secondly, a traditional IPO will give AVG the opportunity to rage a higher amount of capital and investment return than it could raise by the nontraditional auction-based route, though a higher percentage of share allocation and of profits from the initial offering will go to large investors tied into the investment banks (Clinton, 2011). On balance, the traditional IPO will be worth the lower number of investors attracted by traditional IPO, the higher percentage of IPO sale as commission, along with other higher underwriting fees for the traditional IPO (Clinton, 2011). Those fees paid in the course of a traditional IPO can be significant, reportedly: a Manager's Fee 10% - 20% of the spread; an Underwriting Fee 20% - 30% of the spread; and a Selling Concession 50% - 60% of the spread. In addition to these fees are SEC fees of $17.40 per million dollars and assessment on security futures transactions of $0.0042 for each round turn transaction, effective May 25, 2013 (Cody & Traderstatus.com, LLC, 2013). Nevertheless, the potentially significantly higher capital raised through this traditional approach is worth the higher fees and concentration of shares/profit in the hands of larger investors. In contrast, the nontraditional auction-based IPO: pays lower fees and costs, though it must still hire a bank, eventually set the amount of shares and the price and pay SEC fees. In addition, while reaching a far larger number of investors for lower IPO costs and possibly more favorable press, the auction-based IPO also risks losing traditional support of staid Wall Street investors, and achieving a lower amount of capital by this IPO (Clinton, 2011).
2) What do you perceive you have learned in the Module 1 Case Assignment? Which of the following learning outcomes do you feel you have mastered?
Module 1 Case Assignment has taught me the steps a company must take in order to go public. The process starts with the S-1 Registration Statement filing, including a prospectus that describes the company to the SEC and potential investors (SEC Office of Investor Education and Advocacy, 2013, p. 1). The SEC then reviews the S-1 for accuracy and rules compliance and possibly directs revision of the form by the company (Kamlet, 1995). After the company complies in making the S-1 acceptable to the SEC, the SEC issues an order that declares the statement "effective," allowing the company to move to the next…[continue]
"Initial Public Offering An IPO For AVG" (2013, October 21) Retrieved November 29, 2016, from http://www.paperdue.com/essay/initial-public-offering-an-ipo-for-avg-125257
"Initial Public Offering An IPO For AVG" 21 October 2013. Web.29 November. 2016. <http://www.paperdue.com/essay/initial-public-offering-an-ipo-for-avg-125257>
"Initial Public Offering An IPO For AVG", 21 October 2013, Accessed.29 November. 2016, http://www.paperdue.com/essay/initial-public-offering-an-ipo-for-avg-125257
IPO for AVG? An Initial Public Offering (IPO) is described as the first sale of stock by a company that seeks for further growth. IPO is commonly used by such companies in order to generate necessary capital for expansion. AVG is an example of a company looking for further growth through an initial public offering since the firm is uniquely positioned to lead innovation in the industry. While the company
AVG is a software company, known for its suite of online security products. The company has 106 million customers and a variety of products that it markets to both businesses and consumers. It announced in January, 2012 that it intends to file for an initial public offering, or IPO (AVG, 2012). The company must determine what the best type of IPO is. AVG is planning to float on the New
They include the Investment Corporation, company employees, and institutional investors. Apart from a handful of firms, the articles provide inadequate or incomplete information in their prospectuses. I can acquire essential data for purposes of my estimation in my research. The magnitude of under-pricing is estimated at different levels in the secondary markets. For all the articles, the degree of under-pricing appears to be high than the degree of average pricing
SEO This literature review looks at the question of SEO return characteristics of large and small firms from several different perspectives. The goal is to determine whether small firms are more effected by the equity offering than larger firms. This section examines the overall evidence for performance issues (including financial anomalies and manager performance) and whether research indicates evidence for a rational or behavioral explanation. Financial Anomalies A firm's success in a seasoned
Stock/Equity Qs How good is the long-run performance of IPO firms? How is holding on to IPO stocks is a risky proposition? Explain. All publicly traded companies have some form of initial public offerings, and thus judging the truly long-term performance of IPO value means assessing stock market value. In shorter terms, however, most IPO purchases end up lagging behind market averages, and ultimately many newer companies fail (Goldberg, 1999). This means
Business Finance How firm raise capital by using venture capital? What conditions we need to raise capital by using venture capital? Many startup companies are not mature enough to obtain capital from the public or secure a loan with the local banks in their area. They therefore, have to rely on venture capital as a way of raising capital for the firm to continue with the daily operations. Firms hence, raise capital
LBO Hertz LBO Case How does the dual-track process used by Ford to initiate consideration of strategic alternatives affect the bidding process for Hertz? The dual-track process has created a rather interesting environment for potential investors. Not only are investors competing with each other, but if the case that a deal is not worked out then Ford has made provisions for the company to be made public through an initial public offering (IPO).