When it comes to Facebook, founder Mark Zuckerberg marches to the beat of his own drum. And that apparently goes for his company’s IPO.
The Wall Street Journal tonight reports that Facebook is aiming for an IPO in the second quarter of next year that could fetch about $10 billion, which would be one of the largest offerings ever.
But what stuck out to us in the story–besides the timing, offering size and possible $100 billion valuation–is that Facebook has already drawn up the IPO docs without the help of bankers and lawyers who typically drool all over an offering of this magnitude. According to WSJ’s Shayndi Raice:
- Facebook has gone so far as to craft its own prospectus, said the people familiar with the matter. A prospectus document—which is filed with the SEC outlining the company’s business—is typically prepared by bankers and lawyers hired by a company.
- Facebook Chief Financial Officer David Ebersman has been leading the company’s talks with Silicon Valley bankers about an IPO, said people familiar with the matter.
- Bankers are aggressively pursuing the company, but Facebook remains elusive about a commitment to specific banks, even though an IPO looms. Mr. Ebersman told some bankers that he is skeptical over what contribution investment banks could make to a Facebook IPO, since the company is so highly sought after by major investors, said people familiar with the matter.
So Facebook executives may go the unusual route of telling the Wall Street establishment to buzz off, kind of like what Google did in its IPO when it rankled bankers with a Dutch auction that cut out a chunk of the banker fees.
Bankers typically split about 6% to 7% of the offering size in underwriting fees. The Google IPO fees were just 2.8%, or $46 million of the $1.66 billion offering.
At a $10 billion offering size, we’re talking about $600 million to $700 million at stake.
COMMENTARY: I just love it. Sure looks to me like Zuck will do his own IPO like Google did back in 2004. It will be an auction-style at a fixed price is my guess. The 10% float will allow Facebook to create some scarcity and maintain a higher price. Zuck is cutting out those evil investment bankers, who only look out for themselves by offering the initial shares to large hedge funds, money market funds, and wealthy investors. The strategy is to give the stock a boost, before they offer shares to the general public, sometimes at prices that have been bumped so high,. that they immediately drop, leaving a lot of little people holding the bag.
I bet Lloyd Blankfein of Goldman Sachs is fuming that he could be cutout of acting as lead underwriter for the Facebook IPO. Blankfein has invested $1.5 million into Facebook, and was hoping to control his own destiny and making a killing. He still stands to make a huge windfall, but being cutout of those underwriting fees has to sting.
Courtesy of an article dated November 28, 2o11 appearing in The Wall Street Journal's Venture Capital Dispatch
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