IPO University

The traditional process used by underwriters to price IPOs. Underwriters solicit and receive indications of interest from their large institutional clients. The underwriter then makes a subjective appraisal of aggregate demand by looking at the order book and speaking with large clients. The underwriter sets the price, in consultation with the issuer, at a level that balances the conflicting need to raise capital for the issuer and compensate their buy side clients for the risk of investing in companies without trading histories.

Underwriters will post online videos of management's pitch to investors. These net roadshows mimic the live roadshow, often using the same slides and subject matter. Net roadshows contain valuable information, and allow individuals to assess management's ability to effectively communicate their story. However, net roadshows do not allow for a Q&A. And regrettably, some net roadshows are restricted to institutional investors by requiring passwords.