IPO for dummies. Part IV: The Impact of an IPO on Adult-Partner Revenue
Start and table of contents, see the first part .
Can it be that the money that the owners (the companies that issue the shares) receive one-time pay for the obvious loss of part of the money due to the transfer of the shares (and, consequently, part of the ownership of the companies, and therefore part of the profits) to the wrong hands?
When assessing the value of shares by the market, profit is only one of the counted points. The market may overestimate some company or even an entire industry, if it considers that it has very good prospects.
')
So even though the owners blur their share in the company, they increase the value of their shares.
For example, Petit and Vasya had 5 shares of the company, on the balance of which there were two laptops of ten thousand rubles each and a server for 30 thousand in a kolokeshn, each year bringing them a thousand dollars of profit from a cool adlet partner. The property of the company costs 50k rubles, the shares of each founder make up 50% of the company and cost, respectively, 25 thousand, and one share brings 100 dollars of profit per year. As a result of the described IPO, they managed to add 15 shares (eroding the share of each founder from 50% to 20%, as I told earlier), and these shares sold for $ 500 a piece due to the industry boom. You do not believe that they will sell, given the fact that all the property of the company costs less than two kilobax, and the annual profit is only kilobax? I will demonstrate this a little later. So…
... it turned out that the company in the framework of the IPO attracted 500 * 15 = 7500 dollars for development (this is how much, ahem, you can buy exclusive content for further development!). Now the company has only 25 shares, which in total cost 500 * 25 = 12,500 dollars. In the year one share brings profit 1000/25 = 40 dollars. But there is an opinion that the raised $ 7500 will be used for development: in the near future, managers will buy servers and content, and significantly increase the profitability of affiliate programs.
And what about Petya with Vasya? Petya owned 5 shares representing 50% of the company. In the year he received $ 500 in profits (which was not reinvested even in the purchase of new MacBooks, because Peter was courting the girl). Now he owns the same 5 shares, but they make up 20% of the company. Therefore, he receives 200 dollars of profit. Bad, right?
Let's see otherwise. Before the IPO, 5 petyunin shares corresponded to one laptop and a half of the server. 25 thousand rubles. After an IPO, its shares can be estimated through the market rate and the total capitalization of the company (the number of shares multiplied by the value of one share). He still has the same 5 shares, but now they definitely cost $ 500 each, so his share is not $ 25,000, but $ 2,500. In my opinion, not bad. Even if earlier I also told that it is impossible to calculate his share like this :)
Yeah not bad. But will he have less profit than before?
If we buy one share of a business in the market, we will spend $ 500. According to current estimates of profit (based on past results), we would receive 40 dollars of dividends from it if the board of directors decides not to reinvest the profits from its geshefttik). How many years will we have to wait to recoup the cost of buying the stock in full? 500/40 = 12.5.
What we have just calculated is called the P / E coefficient (price to earnings). Just be careful, this is not the ratio of the price of shares to dividends, but the ratio of the price of shares to all the company's profits per share (they just conditionally coincide in our case). It is very convenient to compare different companies from, for example, the same industry. Who is undervalued, who is overvalued ... Here, for example, Yahoo Finance tells us that the P / E for Google is 20.13 with the industry average of 22.50. Not only is a boom ( an article about P / E on wikipedia tells us that everything above 14-16 is an overestimate, caused either by a repartitioned market, or by very high expectations and prospects, which is basically the same thing) Google is also undervalued relative to the industry as a whole - MUST TAKE !!!! 11
But this is all garbage. After the P / E for the Russian company Polyus Gold, equal to 45.7, or the P / E for the Mikhailovsky GOK, equal to 460, you should not be surprised at anything.
Oh yes. We counted a P / E for a petivasal start-up at 12.5, which is very, very small relative to the market (they could have been better off; at P / E, about 15 stocks would cost not $ 500 each, but 40 * 15 = 600 and then Petit’s share would no longer cost 25 thousand rubles and not 2500 dollars, but 600 * 5 = 3000 dollars). But at the same time, we do not take into account where the company spends $ 7,500 received for development.
After all, if she successfully invests them in servers, affiliate programs and content, then the one that grew in a year (as well as grew thin mustaches, received the first “adult” credit card in the bank and, as a birthday present, a new computer without an installed “parent filter”) the base can bring her even more profit, in proportion to the increase in costs ...
Remember, initially our company cost 50k rubles and brought $ 1000 a year? - and so, for simplicity of calculations we convert these 50k rubles not even into 1700, but into 2000 dollars. After the IPO, another $ 7,500 came to the company. If these new 7500s allow purchasing servers, content, and setting up affiliate programs so that new profits increase proportionally, this will mean that profits increase by 1000 * 7500/2000 = $ 3,750! (Achtung! Achtung! If you do not have the charisma and persuasiveness of the founder of Color.com , I would not recommend using this and the following calculation methods in the business plan for presentation to your investor!)
And if the managers successfully manage the money received by the company for an IPO (and the existing decrepit server does not break down in a year), then next year it can manage to get 1000 + 3750 = 4750 dollars of profit.
And each share (out of 25) will no longer have $ 40 of total profit, but 4750/25 = 190 dollars.
The share of the total profit of Petit, the owner of 5 shares, will be 190 * 5 = 950 dollars. Oops. And before the IPO, by the way, he received $ 500.
Stop-stop, and why are they so poorly released, if such promising?
So after all the care. When a company is listed on the stock exchange, its price is determined by market mechanisms. But at the time of the launch of the IPO, the shares should have the original price, the placement price - in our case it is 500 bucks. Why 500, not 400, not 600 and not 1000? After all, a thousand more! :)
Because just at the rate of 500 bucks per share, the empirically determined (and carefully described in the previous chapter) the value of the company by its management and underwriter. Hundreds of smart heads, one and all with higher education, analyzed all the parameters for a year, which may affect the value of the company, and therefore its shares: starting from the veracity of rumors that Vasya got a deuce for behavior in a quarter, because that at breaks he showed some black and white photos for five kopecks - oh, what would happen if journalists dig it out - and ending with the form of a mole on the hip of Amanda’s model in the seventeenth photoset of the paid section. After that, they determined this placement price, or rather the price range. Between us, the industry chosen by Vasya and Petya is very promising, and if you focus on the average market P / E, $ 600 per share is not a sin to give. But Petya and Vasya do not have higher education, and the fan on the server is somehow buggy, which increases the risks. And, you know, a wise underwriter decides that it is better to be safe and stay lower (but guaranteed to grow later, please investors, and sign an entire book of applications before an IPO) than to stay high, but at the risk of underfulfillment of the book of applications, and after the start of trading, it is still falling.
What about the underwriter? He is primarily interested in his commission - say, five to ten percent of the funds raised (in our case, the petitasin underwriter will pay about 375 dollars, if I was not too lazy to take into account his commission in the calculations). But at the same time, he risks - if he suddenly gave Petya and Vasya a firm commitment to sell all 100% of the IPO-issued shares, then all the shares that were not sold before the IPO in the event of a fall in the exchange rate after the start of trading will be his loss. However, if he did not give firm commitment, then he risks already different: his analytical skills will be obscene by other market participants, and he, who has lost his face, image and reputation, will have to pass on tatami and make seppuku.
Therefore, it would be ... careless to assume that the underwriter will do its best to conduct an IPO at all costs.
Real numbers, of course, are much nicer. Yandex during the IPO raised $ 1.3 billion, and its underwriters - Morgan Stanley, Deutsche Bank and Goldman Sachs (yes, there may be more than one, a whole syndicate ! - although one of them is called the lead manager and skims all the cream) - for three broke 65 million dollars of the commission. The placement was re-signed 15 times, which means that the demand for stocks was 15 times higher than the offer. No wonder that with such demand the YNDX quotes crawled up, reaching 34 dollars against the starting 25 (now they have slightly fallen - to 31). And do not think that the mighty handful of underwriters got nothing from this. As soon as it became clear that the shares were going up, they took advantage of the right ( option ) specified at the time of placement to buy “some more Yandex” at the price of placement. That is, for 25 bucks. 5.2 million shares purchased in this way, multiplied by 34-25 = 9 bucks, are equal to another 47 million dollars of net, undistorted profit.
In the next part: life after IPO .
Can it be that the money that the owners (the companies that issue the shares) receive one-time pay for the obvious loss of part of the money due to the transfer of the shares (and, consequently, part of the ownership of the companies, and therefore part of the profits) to the wrong hands?
When assessing the value of shares by the market, profit is only one of the counted points. The market may overestimate some company or even an entire industry, if it considers that it has very good prospects.
')
So even though the owners blur their share in the company, they increase the value of their shares.
For example, Petit and Vasya had 5 shares of the company, on the balance of which there were two laptops of ten thousand rubles each and a server for 30 thousand in a kolokeshn, each year bringing them a thousand dollars of profit from a cool adlet partner. The property of the company costs 50k rubles, the shares of each founder make up 50% of the company and cost, respectively, 25 thousand, and one share brings 100 dollars of profit per year. As a result of the described IPO, they managed to add 15 shares (eroding the share of each founder from 50% to 20%, as I told earlier), and these shares sold for $ 500 a piece due to the industry boom. You do not believe that they will sell, given the fact that all the property of the company costs less than two kilobax, and the annual profit is only kilobax? I will demonstrate this a little later. So…
... it turned out that the company in the framework of the IPO attracted 500 * 15 = 7500 dollars for development (this is how much, ahem, you can buy exclusive content for further development!). Now the company has only 25 shares, which in total cost 500 * 25 = 12,500 dollars. In the year one share brings profit 1000/25 = 40 dollars. But there is an opinion that the raised $ 7500 will be used for development: in the near future, managers will buy servers and content, and significantly increase the profitability of affiliate programs.
And what about Petya with Vasya? Petya owned 5 shares representing 50% of the company. In the year he received $ 500 in profits (which was not reinvested even in the purchase of new MacBooks, because Peter was courting the girl). Now he owns the same 5 shares, but they make up 20% of the company. Therefore, he receives 200 dollars of profit. Bad, right?
Let's see otherwise. Before the IPO, 5 petyunin shares corresponded to one laptop and a half of the server. 25 thousand rubles. After an IPO, its shares can be estimated through the market rate and the total capitalization of the company (the number of shares multiplied by the value of one share). He still has the same 5 shares, but now they definitely cost $ 500 each, so his share is not $ 25,000, but $ 2,500. In my opinion, not bad. Even if earlier I also told that it is impossible to calculate his share like this :)
Yeah not bad. But will he have less profit than before?
If we buy one share of a business in the market, we will spend $ 500. According to current estimates of profit (based on past results), we would receive 40 dollars of dividends from it if the board of directors decides not to reinvest the profits from its geshefttik). How many years will we have to wait to recoup the cost of buying the stock in full? 500/40 = 12.5.
What we have just calculated is called the P / E coefficient (price to earnings). Just be careful, this is not the ratio of the price of shares to dividends, but the ratio of the price of shares to all the company's profits per share (they just conditionally coincide in our case). It is very convenient to compare different companies from, for example, the same industry. Who is undervalued, who is overvalued ... Here, for example, Yahoo Finance tells us that the P / E for Google is 20.13 with the industry average of 22.50. Not only is a boom ( an article about P / E on wikipedia tells us that everything above 14-16 is an overestimate, caused either by a repartitioned market, or by very high expectations and prospects, which is basically the same thing) Google is also undervalued relative to the industry as a whole - MUST TAKE !!!! 11
But this is all garbage. After the P / E for the Russian company Polyus Gold, equal to 45.7, or the P / E for the Mikhailovsky GOK, equal to 460, you should not be surprised at anything.
Oh yes. We counted a P / E for a petivasal start-up at 12.5, which is very, very small relative to the market (they could have been better off; at P / E, about 15 stocks would cost not $ 500 each, but 40 * 15 = 600 and then Petit’s share would no longer cost 25 thousand rubles and not 2500 dollars, but 600 * 5 = 3000 dollars). But at the same time, we do not take into account where the company spends $ 7,500 received for development.
After all, if she successfully invests them in servers, affiliate programs and content, then the one that grew in a year (as well as grew thin mustaches, received the first “adult” credit card in the bank and, as a birthday present, a new computer without an installed “parent filter”) the base can bring her even more profit, in proportion to the increase in costs ...
Remember, initially our company cost 50k rubles and brought $ 1000 a year? - and so, for simplicity of calculations we convert these 50k rubles not even into 1700, but into 2000 dollars. After the IPO, another $ 7,500 came to the company. If these new 7500s allow purchasing servers, content, and setting up affiliate programs so that new profits increase proportionally, this will mean that profits increase by 1000 * 7500/2000 = $ 3,750! (Achtung! Achtung! If you do not have the charisma and persuasiveness of the founder of Color.com , I would not recommend using this and the following calculation methods in the business plan for presentation to your investor!)
And if the managers successfully manage the money received by the company for an IPO (and the existing decrepit server does not break down in a year), then next year it can manage to get 1000 + 3750 = 4750 dollars of profit.
And each share (out of 25) will no longer have $ 40 of total profit, but 4750/25 = 190 dollars.
The share of the total profit of Petit, the owner of 5 shares, will be 190 * 5 = 950 dollars. Oops. And before the IPO, by the way, he received $ 500.
Stop-stop, and why are they so poorly released, if such promising?
So after all the care. When a company is listed on the stock exchange, its price is determined by market mechanisms. But at the time of the launch of the IPO, the shares should have the original price, the placement price - in our case it is 500 bucks. Why 500, not 400, not 600 and not 1000? After all, a thousand more! :)
Because just at the rate of 500 bucks per share, the empirically determined (and carefully described in the previous chapter) the value of the company by its management and underwriter. Hundreds of smart heads, one and all with higher education, analyzed all the parameters for a year, which may affect the value of the company, and therefore its shares: starting from the veracity of rumors that Vasya got a deuce for behavior in a quarter, because that at breaks he showed some black and white photos for five kopecks - oh, what would happen if journalists dig it out - and ending with the form of a mole on the hip of Amanda’s model in the seventeenth photoset of the paid section. After that, they determined this placement price, or rather the price range. Between us, the industry chosen by Vasya and Petya is very promising, and if you focus on the average market P / E, $ 600 per share is not a sin to give. But Petya and Vasya do not have higher education, and the fan on the server is somehow buggy, which increases the risks. And, you know, a wise underwriter decides that it is better to be safe and stay lower (but guaranteed to grow later, please investors, and sign an entire book of applications before an IPO) than to stay high, but at the risk of underfulfillment of the book of applications, and after the start of trading, it is still falling.
What about the underwriter? He is primarily interested in his commission - say, five to ten percent of the funds raised (in our case, the petitasin underwriter will pay about 375 dollars, if I was not too lazy to take into account his commission in the calculations). But at the same time, he risks - if he suddenly gave Petya and Vasya a firm commitment to sell all 100% of the IPO-issued shares, then all the shares that were not sold before the IPO in the event of a fall in the exchange rate after the start of trading will be his loss. However, if he did not give firm commitment, then he risks already different: his analytical skills will be obscene by other market participants, and he, who has lost his face, image and reputation, will have to pass on tatami and make seppuku.
Therefore, it would be ... careless to assume that the underwriter will do its best to conduct an IPO at all costs.
Real numbers, of course, are much nicer. Yandex during the IPO raised $ 1.3 billion, and its underwriters - Morgan Stanley, Deutsche Bank and Goldman Sachs (yes, there may be more than one, a whole syndicate ! - although one of them is called the lead manager and skims all the cream) - for three broke 65 million dollars of the commission. The placement was re-signed 15 times, which means that the demand for stocks was 15 times higher than the offer. No wonder that with such demand the YNDX quotes crawled up, reaching 34 dollars against the starting 25 (now they have slightly fallen - to 31). And do not think that the mighty handful of underwriters got nothing from this. As soon as it became clear that the shares were going up, they took advantage of the right ( option ) specified at the time of placement to buy “some more Yandex” at the price of placement. That is, for 25 bucks. 5.2 million shares purchased in this way, multiplied by 34-25 = 9 bucks, are equal to another 47 million dollars of net, undistorted profit.
In the next part: life after IPO .
Source: https://habr.com/ru/post/121243/
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