"There are good IPOs, and there are great IPOs. The Google IPO is the rarest kind: One that draws the white-hot glare of public attention."
On August 19, 2004, Google went public and came out with its Initial Public Offering (IPO). It turned out to be the 25th largest IPO in corporate history and the biggest technology IPO till date.
Before its release, the IPO had been the subject of several controversies and the target of a lot of criticism. In fact, Google too seemed to have felt threatened by the controversies and just a day before it went public, it revised and scaled down its estimated per share price range from $108-$135 to $85-$95 per share. The company also reduced the number of shares it had planned to sell from 25.7 million to 19.6 million.
What was unique about the Google IPO was the unusual auction method by which the company chose to sell its shares. Google used the "Dutch Auction method" (Refer to Exhibit I) to sell its shares because it felt that under the conventional IPO method, most small investors would be unable to invest and the IPO would get limited to some large institutions, investment bankers, and their clients. Most investment bankers had declared the IPO to be fraught with risk even before it was launched and had said that the Dutch Auction method was too complicated for the average American who "doesn't have the skills to analyze the business or the business prospect of a company going public, whether its Google or not." Google took a remarkable risk by using an unconventional system and it seemed to have managed to pull it off successfully. |
