Instead, the company wants liquidity for existing shareholders or sometimes liquid shares to use as m&a currency.
That tilts the balance in favour of paying a "brokerage fee" in exchange for de-risking and simplification. Occasionally IPOs go badly, and the potential disruption is worrying.
Like with a lot of high finance, competition is weak. So, the "price" of these services is (perhaps, idk personally) high. Also, CEOs run companies, not IPOs. Its just not really a cost you optimize and the market isn't there to optimize it by default.
Do they? Aren't existing shareholders usually bound to hold their shares for some time (e.g. 6 months after the IPO)?
> The story is that there was a big old legacy business that comfortably sold a standard package of features for a lucrative price, and then a bunch of tech startups came in and questioned everything; they unbundled the service so customers could get what they wanted rather than what the legacy players wanted to sell. It’s just that the tech companies didn’t do it as competitors, by offering the disruptive unbundled product, but as customers, by demanding it.
If one inconsequential event like this warrants such an extreme reaction respect will be in short supply everywhere.
I think many of us (or at least a few loud members) in the tech community have started to see underwriting as a bad form of cronyism. The point jump on opening day becomes substantially about putting money in the pockets of a favored set of investors. Half of that comes from frothing up the public, but the other half comes out of the pockets of the pre-IPO investors and the company. That's not okay.
We know that in a hot neighborhood you want to price your house a little low to get a bidding war going. I get that something similar happens in the stock market. But that's an art of shaving 5-10% off hoping you yield an extra 5-10% over your original price point. We're seeing much, much bigger spreads than that with IPOs, which I take to mean that everyone but the underwriters and their friends are getting screwed.