The IPO Buzz: Anatomy of an IPO

It seemed that everybody was issuing their analysis of Groupon’s valuation — some as high as $30 billion a few months ago — except the investment professionals.
The only thing the pros know is what is in a company’s preliminary prospectus, or “red herring” in Wall Street jargon. And to draw a valuation, the company must declare the number of shares it plans to have outstanding and the proposed price range for its common stock.
These were the missing figures in Groupon’s earlier “red herrings” and to make valuations then was nothing more than speculation by those who were not investment professionals.
On Friday, Oct. 21, the company filled in the blanks.
Groupon filed to offer 30 million shares of Class A common stock at $16 to $18 each to raised $510 million, the mid-point of the filing range. It also gave the breakdown of the number of shares to be outstanding after the offering:
* Class A common stock: 630,403,352 (with one vote per share)
* Class B common stock: 2,399,976 (with 150 votes per share)
* Total stock outstanding: 632,803,328 shares
At $17 per share, it places Groupon’s market capitalization -– or valuation — at $10.8 billion for now.
Of course, this will be subject to change, depending upon any changes in the offering terms and in the market price of its common stock once the stock starts trading.
Save the Date
But not everything is found in the “red herring.”
It is the expected pricing date. That becomes available once the proposed pricing terms have been announced. The joint-lead managing underwriters – Morgan Stanley, Goldman Sachs and Credit Suisse — are the source of this information. (Brides and grooms aren’t the only people to play the ‘Save the Date’ game. It applies to Wall Street, too.)
For Groupon, the deal is expected to be priced on Thursday evening, Nov. 3, to trade Friday morning on the NASDAQ Global Select Market under the proposed symbol “GRPN.”
A Capital Idea
This brings us to this week’s IPO calendar.
Selway Capital Acquisition, is a newly formed “blank check” company based in Englewood, New Jersey. Selway plans to offer 3 million units at $10 each.
The IPO is expected to be priced on Thursday, evening, Oct. 27, and to trade on Friday morning on the OTC Bulletin Board under a symbol to be determined later. Joint-lead managers are: Aegis Capital and Chardan Capital Markets.
Stay tuned. 
Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.