Photo Courtesy To: http://www.forbes.com/fdc/welcome_mjx.shtml
In one of my previous blogs, I analyzed the IPO of Alibaba, however, I feel that I have gained more knowledge after taking the Comm 101 finance classes and an investment banking workshop through the UBC Finance club and can now look at an IPO from a more “fact” based point-of-view.
Many people have asked me what I think about some issues involving IPOs and the privileges investment banking companies receive.
First of all, it is very interesting to see that influential investment banking companies get the first, and usually greatest, piece of the pie before the IPO is released.
Is this fair?
Well, personally, when I think of capitalistic economies, I DON’T think everything is equal for everyone. Even though it may seem unfair to me right now, I would most definitely be okay with this method if I were to be working for one of these companies.
Second of all, many people think that ALL companies that have the opportunity to invest in an IPO, actually end up investing.
Is this true?
NO! Investment banking involves a great amount of research to look at the advantages and disadvantages of putting money into a company. The only downfall I see from this is that people who want to invest can’t because they are not that influential. Yet, some influential companies have the power to invest, but decide not to.
Overall, no industry is perfect. The more influential you are, the more privileged you are. It’s the sad truth that applies to IPOs and investment banking companies.