We anticipate three reactions from people on the road: 1) “This is a great, I gotta get in.” 2) “This is good but, three year-old company…I’m not ready to take that risk.” 3) “I don’t get it. You guys are whacky.” We hope it’s more of the first two. –Jason Child, Groupon CFO, on an employee call to discuss the IPO.
IPOs
It would be nice to think that the work that investment bankers do is quantum-physics difficult, highly differentiated, and what the heck, sexually arousing. It’s mostly not. Some things are more rocket-sciency than others. Structuring a cross-border public company merger with simultaneous-close asset divestiture to a sponsor to optimize taxes in three jurisdictions while complying with debt covenants is a bit harder than ripping off a drive-by investment grade offering. (Usually it pays more too.)
And then there’s underwriting hyped tech IPOs. Now I should say I’ve never done one and maybe I’m missing a critical component, but as far as I can tell the ratio of pay to complex-and-differentiated content seems quite high. Basically the method is:
- Get mandate
- Write prospectus saying “Groupon is awesome”
- Put together roadshow deck saying “no, really”
- Set up meetings with the 100 investors who buy everything
- Charter a jet to get you to those meetings
- Bring the CEO to those meetings
- Maybe get him to wear a tie
- Profit!
That last step is critical. Groupon’s underwriters are set to make 5% of proceeds on the IPO, or $25.5mm if it prices at the midpoint of the launch range.* Continue reading »
As many of you know, though there are tremendous benefits to be gained from taking a public company, there are also serious downsides to consider, like unwanted scrutiny of your business practices. While executives at Dunkin’ Brands were probably pretty pleased with last week’s opening day pop, the IPO has presented some problems for the branch office employees who’ve been using the pastry purveyor as a front for the real goods they’re selling: ass-play and hand jobs via the mouth. Continue reading »
Morgan Stanley, run by chief James Gorman, is rapidly becoming the go-to bank in the Valley, having landed the lead on a number of high-profile tech IPOs this year, including LinkedIn and Pandora. It has also signed on to head Groupon’s expected public debut. Goldman, headed by CEO Lloyd Blankfein, is also on Zynga’s underwriting team but will take a backseat to its longtime rival — a position with which the bank is becoming all too familiar. Goldman’s persuasive pitch for Zynga made for a close contest, and the company was almost swayed Goldman’s way, sources said. But Morgan Stanley has a better network in the Valley to woo the tech darlings coming of age, according to venture-capital insiders. [NYP]
Ticker symbol: OAK. Continue reading »
Tired Of Fickle Capital And Passionless Investor-Gnats, Bill Ackman Mulls $3 Billion Fund IPO
By Bess Levin
As you know, hedge fund manager Bill Ackman loves himself a good activist investment, particularly if it’s in a place where he can get his lawn mowers, towels, flat screen TVs, and pretzel kegs all for an extremely reasonable price. Unfortunately, while many of his investors support him in this pursuit, some don’t seem to understand how Bill operates. Take Target, for example. The first time he laid eyes on it…I don’t want to say there were tears, but it got emotional. The prices? The layout? That adorable fucking dog? He had to have it- ALL OF IT. Sure, Pershing Square did get involved but it could’ve been faster, bigger, soon. I don’t want to say you blew it for him but…you blew it for him. That’s why Bill’s been thinking and what he’s come up with is that the next time he’s doing one of Sunday morning walkabouts** in a suburban strip mall and stumbles upon his next great love, there can be no hesitation. Which is why Pershing Square proses this. Continue reading »
Groupon Inc., seeking to raise $750 million in an initial public offering, asked six more banks to help underwrite the sale, including Barclays Plc and JPMorgan Chase & Co, said two people with knowledge of the situation. Citigroup Inc., Deutsche Bank AG, Bank of America Corp. and Allen & Co. were also offered a role, said the people, who declined to be identified because the decision isn’t public. [Bloomberg]
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