IPO: Bethesda Biosys issues an IPO sold on a best-efforts basis. The company's investment bank demands a spread of 18 percent of the offer price, which is set at $25 per share. Four million shares are issued. However, the bank was overly optimistic and eventually is able to sell the stock for only $23 per share. What are the proceeds for the issuer?

Question

Quizplus · Accepted Answer

The proceeds for the issuer are calculated as the selling price per share minus the spread, multiplied by the number of shares. The selling price is $23, and the spread is 18% of the $25 offer price, which is $4.50. Therefore, the proceeds per share are $23 - $4.50 = $18.50. The total proceeds are $18.50 * 4,000,000 = $74 million.

IPO: Bethesda Biosys Issues an IPO Sold on a Best-Efforts