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Q.

How IPO value is fixed? What are the main factors in deciding IPO value by a company?

Tags: money, careers, education
Asked by cyrus irani, 18 Jan '10 04:05 pm
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Answers (5)

1.

IPO is decided when the promters or current owners of company decide to exit. Then these shares are brought by the public. There is no such formula to fix IPO value. It is such that it generates profits to promoters, and also is cheap enough to compete with shares of other companies.
Answered by RAJAN MHAMAI, 19 Jan '10 08:59 pm

 
  
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2.

1. Reputation of the Company; 2. Market Sentiment; 3. EPS (Earning per share); 4. Book value of the share etc.
Answered by Anil K Chugh, 19 Jan '10 08:56 pm

 
  
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3.

We frequently get questions about IPOs. The ones that skyrocket on their first day of trading make investors wonder why all of them don't rise that much. Meanwhile some investors put in orders for an IPO stock, and wind up overpaying, or failing to "catch the ride." We also get a lot of questions wondering how a stock can IPO at $15, but cost $60 on its first trade. Here's an explanation of how IPOs happen, and some suggestions for those wanting to get in on IPO day when you aren't part of the IPO.
The Company Decides to Go Public

The first step, of course, is that a company decides to raise capital by selling shares in a public offering.

To do this, it generally has to have passed a certain level of "certification." In the old days, this meant that a company had proven its business model, shown good growth, had a reasonable business purpose for the capital, and generally had at least $10 million in revenues. And, oh yes, was profitable.

The bar was lowered considerably in th ...more
Answered by saranathan Narasimhan, 18 Jan '10 04:09 pm

 
  
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4.

Generally it is fixed by lead manager comparing it with similar companies listed and future prospects
Answered by Avtar Khalsa, 18 Jan '10 04:07 pm

 
  
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5.

Various factors relating to companys background,performance and future prospects determine the IPO price
Answered by anil garg, 25 Jan '10 09:36 pm

 
  
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