Friends and Family Shares
You just know it's gonna be a hot IPO. Price talk has been 15 bucks a share, but the capital markets lady at Goldman keeps mumbling something that sounds like "twenty two bucks first print." So you're thinking that your friends and family will get an easy 7 dollar a share ride if they buy in. And you want to pay back Crazy Uncle Larry for the weird birthday presents he always bought you.
So before the IPO, the bank asks you for a list of your friends and family members, each of whom will be allowed to buy up to 500 shares after filling out a bunch of forms covering the bank's a**, such that if the IPO tanks and the first print is actually 7 bucks, then you can't sue the bank for not properly marketing the offering, and for the fact that the friends and family people were not, in fact, "big boys and girls," i.e. professionals who "shoulda known better."
The process of giving to friends and family is a regular Thing now with IPOs, so if you know someone soon going public, uh...invest in that beer night for them, and hopefully they'll remember you when it's time.
Related or Semi-related Video
Finance: What is an IPO?25 Views
And finance allah shmoop What is an i p o
Well this is a hippo and it has nothing to
do with an ipo Auras Normal humans pronounce it if
both well actually most people just spell it out I
po It stands for initial public offering In the three
words tell the story and i pl refers to a
company who's raising money by selling shares of itself to
the public for the first time a maiden voyage in
public funding if you will Whatever dot com has forty
million shares outstanding after three private rounds with venture capitalists
and private investors it wants to raise money to go
big internationally And for the first time it will offer
shares to joe and jill public And that means that
all of it shares will be tradable publicly on the
open market like on nasdaq or the new york stock
exchange That is the insiders early investors founders et cetera
will be able to just call their broker at schwab
or fidelity or wherever and sell their shares get liquid
and buy themselves a maserati because it's not what everyone
does after a nice meal So whatever dot com sells
ten million shares a twelve bucks each to raise one
hundred twenty million dollars which they can spend to build
out offices all over the world So yeah that's an
ai po and that's Why a company generally wants to
make shares available to the public because once you've made
an initial public offering and you make money off the
sales of your stock you khun by as many hippos
as you like and just remember to feed them three
times a day they get Cranky if they go too 00:01:35.158 --> [endTime] long in between No
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