A B C D E-F G H I-J K-L M-N O P Q R S T U V-Z

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Calendar
This refers to upcoming IPOs and secondary offerings. Brokerage houses have equity calendars, bond calendars and municipal calendars.

Carve-Out
A specific type of spin-off in which the corporate parent consolidates a particular line of business (e.g. Cantor Fitzgerald's combination of its electronic bond trading units into one subsidiary) and then sells that newly created subsidiary to investors. In essence, the company is "carving out" a piece of its business with a specific business focus and selling it to the public to highlight the value of niche business operations within the larger company. Usually done in the form of a true spin-off with an independent board and separate financial statements, but heavy cross ownership by parent. Sometimes done in the form of a tracking stock structure (e.g. AT&T Wireless).

Class Action Suit
Litigation undertaken on behalf of shareholders against companies whose shares have declined in price, alleging misstatements or omissions in the prospectus or other material communicated to the public is called a class action. These lawsuits, now harder to mount due to Federal legislation, are spearheaded by a handful of law firms specializing in this area and are focused on recent IPOs and technology companies.

Clearing Price
The price at which all shares of an IPO can be sold to investors in a Dutch Auction. Sometimes referred to as the “market clearing price”.

Co-Manager
Most initial public offerings and secondary offerings have more than one underwriter. The manager controlling the offering is called the lead manager. Other underwriters are co-managers. The names of these underwriters appear on the bottom of the front page of the prospectus, with the most important manager appearing on the top left, and the co-managers arrayed from left to right in order of importance.

Commissions
The commissions paid to brokers for buying or selling stock range from 3 to 5 cents a share for institutions to 15 cents a share for discount brokers. But when you purchase an IPO at the offer price, you pay no commission. Instead, the underwriter charges the issuing company a gross spread, which is the difference between the public offering price and what the issuing company received. Typically, this spread is 7% to 8% of the IPO's offering price. The profitability of doing IPOs is one important reason why investment banks focus on developing this business.

Comparables
When investment bankers decide how to price an IPO, they study the valuations of similar, already public companies. These are called comparables. The pricing range indicated in the registration statement or in the prospectus reflects the proposed valuation of the IPO relative to the comparables. It is critical to select good comparables. Bankers sometimes lean toward comparables with high valuations, but knowledgeable investors do their own homework. Sometimes, an IPO may be the first company in its industry to go public. Then, there are no comparables. In those cases, investors look to analogous companies on which to base a valuation. Companies that had no direct comparables at the time they went public include Yahoo!, Amazon.com, and MFS (now MCI Worldcom).

 

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