The Role of the Financial Manager

The Role of the Financial Manager

2006

The Role of the Financial Manager

It is very important for companies to ensure that they use the most efficient method of fund raising when they go public . It might seem to an inexperienced manager that the method of capital raising which is chosen by the company does not have a large impact on the success of the firm 's IPO . However , the method has a crucial impact on the success of the company . Google 's IPO has been a surprise for many investors . The

br company decided not to take a traditional way in their IPO but to apply the method of online Dutch auction when raising the capital for the company . The results of Google 's IPO were in many ways controversial- the company actually raised lots of capital , but the company still did not manage to minimize the difference between the offer and open price as some other companies did . In this , the overview of Google 's IPO is given and advantages of this method of capital rising are described The argues that the method of raising funds chosen by Google was very good for the firm , and that this method should be used by other companies in future . The method of online auction was very efficient for Google , even though the company did not manage to achieve some of its goals . Other companies need to be encouraged to use this method Recommendations are provided concerning ways of minimizing the negative features of online auction IPO

Online auction IPO 's are not a novel for many companies . This method was first used by firms in 1999 and since that time , many organizations applied online auction IPO in to raise funds . Some of these companies were successful , others were not . This method reached its highest level of popularity after Google decided to apply it . Google 's IPO has been one of the major s of conversation in business circles for a long time before the offering , even though Google was not the first one to apply it . Google 's controversial IPO last year generated much interest not only because of its global name recognition , but also because of its use of the Dutch auction method in pricing and selling its offering (Hensel , 2005 . The reason why Google 's IPO attracted so much attention was that most investors were expecting Google to go with traditional methods of IPO , the way many large companies did . However Google 's management decided to use a non-traditional method of capital raising in to achieve better results

One of the greatest advantages of online auction IPO , which was taken into consideration by the management , is its alleged minimization of the increase between the offer price and the opening price of the offering . From the perspective of the issuing company , this price increase represents "money left on the table " and , therefore , value which it did not appropriate (Hensel , 2005 . Online auction IPO is the most...