While investors are eagerly looking forward to any word about the upcoming initial public offering by Facebook, banks may have a little less to be happy about. The Wall Street Journal reports that Facebook could skip the process of collecting underwriters for its IPO entirely.
Underwriters are the banks responsible for judging the interest in an IPO, helping to corral investors and set the initial offering price. Groupon, the latest major online company to go public, ultimately made use of 14 banks as underwriters, while Google had 10 during its IPO in 2004.
However, finance chief David Ebersman has suggested that underwriters might not be necessary for an IPO of such scale as Facebook, and the company has already begun some of the ground work of speaking with investors to rally interest.
Though banks such as Goldman Sachs and Morgan Stanley could still see a role in the sale, the Journal suggests that the company could follow a model similar to Google’s, which slashed its IPO fees by nearly 30 percent using an electronic auction based on the model created by WR Hambrecht + Co.
The Chicago Tribune notes that the underwriters for Groupon have garnered criticism for the performance of the company’s stock since its IPO.