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04
Jul

Getting the Lingo Down Understand IPOs, Prime Brokers, and More!

Written by admin. Posted in Ipo company, Prime brokerage services, Recently priced initial public offerings

Recently priced initial public offerings

The stock market can seem bewildering at first glance, but if you’re thinking about raising money for your business and opening up financial possibilities for your company, entering the world of professional traders, prime brokers, and talking with an IPO service might all be in your near future. An IPO (initial public offerings) is likely to be your first step if you’re going public with your stock and if your company gets large enough, you might want to consider getting involved with prime brokers, which are special services offered to only a select few clients. Getting involved with prime brokers can open a whole new set of financial doors for you to open and explore. However, before you can even qualify for prime broker services, you’re going to have a substantial amount of work to do beforehand. So let’s talk about IPOs and other language you’re going to need to know.
What Is an IPO?
An initial public offering is the when a company first sells its stock to the public. It’s only considered an IPO when your company has never before given equity to the public. Now thousands of shareholders have access and while you can raise a significant amount of money this way, you’re also going to face more rules and regulations, since you’re in the public eye. However, there are a lot of perks to “going public” as well. If you issue debt, you might get better rates, since you’re being analyzed so thoroughly in the public eye. You can always sell more stock, as long as the demand is there, so mergers and acquisitions are often easier to accomplish, since stock can be added to the deal on the table. Many companies looking to merge or acquire see that as a good bonus. There’s also a certain amount of importance and success associated with being in the open market, which can look great for your company, and even getting an IPO can be difficult in the beginning. The bottom line is: if you can sell stock to other people, the money is going to start coming in.
How Well Do IPOs Tend to Do? What Else Do I Need to Know?
Essentially, IPOs tend to do the best when the markets are doing well. If there’s the belief that a certain market will be up and doing well in the coming year, the IPOs are probably going to be increasing and even outperforming the predictions previously made. They can also be attractive to the public, since IPO prices are generally 13-15% less than the typical trading price. And 2015 was predicted to be the most successful year for IPOs since 2000!
The acronym “IPO” became commonly known in the stock market starting in the late 1990s. Typically, most have a lock-up period, which consists of a contract (between 3-24 months) signed by the underwriters and insiders of the company, that doesn’t allow them to sell stock for a certain amount of time. When the IPO is issued, between 10-15% of the company is then offered up for sale. Generally, institutional investors snap up IPOs, since they benefit people who want (and will) buy large amounts of stock before it debuts on the market. These investors usually give the companies selling IPOs triple-digit profits on just their first day of trading!
So What Is Prime Brokering?
Prime brokerage was invented and begun by hedge funds. Essentially, it’s a specially curated group of services that brokerages offer to certain clients. Securities lending, cash management, daily account statements, and more may be offered. This can be especially appealing to prime brokers clients, because they suddenly have a significant number of resources at their disposal that they might not have been able to have in office before. Large-scale investors or institutions (think banks, government institutions, corporate giants, etc.,) tend to comprise the majority of prime brokerage clients.
The financial world can often seem wild and terrifying to those without much experience. But getting smart people on your team who are stock market savvy and up to date on IPO news, stock market news, and more, can be a huge asset to your team and company.

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