Emmanuel nice
Banned
After the company has registered with the SEC and met its other requirements, the company should contact with an investment bank (s) and sign a contract for the distribution of the shares the company is willing and able to sell.
The other contractors may agree to underwrite the distribution of shares. After this both parties agree on an initial price at which the stocks to be opened for sale.
This price is based on the earnings or potential earnings of the company as well as its growth. Additionally, considerations about the market's willingness to accept the agreed price should be made.
After the contracts have been signed and the price considerations made, the underwriters are ready to make the first offers to major broker client. In turn they offer these bundles of stocks to their big retail and institutional clients.
Along this chain every participant gets his/her reward. Since the stock goes through several people until it reaches the final investor, it's final price may be well above the initially set price. This is especially true if the company that issues the stock enjoys the status of being a hot deal.
As you can see individual investors suffer from such a system since at the time the stock reaches their hands, its price is significantly above the IPO level.
The other contractors may agree to underwrite the distribution of shares. After this both parties agree on an initial price at which the stocks to be opened for sale.
This price is based on the earnings or potential earnings of the company as well as its growth. Additionally, considerations about the market's willingness to accept the agreed price should be made.
After the contracts have been signed and the price considerations made, the underwriters are ready to make the first offers to major broker client. In turn they offer these bundles of stocks to their big retail and institutional clients.
Along this chain every participant gets his/her reward. Since the stock goes through several people until it reaches the final investor, it's final price may be well above the initially set price. This is especially true if the company that issues the stock enjoys the status of being a hot deal.
As you can see individual investors suffer from such a system since at the time the stock reaches their hands, its price is significantly above the IPO level.
