Griping about the process by which companies go public is a pastime nearly as venerable as the IPO itself. Indeed, it’s a rare deal that makes everyone – the company itself, potential and actual investors and the bankers being paid for undertaking the process – happy. A typical transaction usually results in at least one of the following: underwriters disappointed that they weren’t able to maximize (or hang on to) the fees they earned in the transaction; the company fretting that the IPO was mispriced or that shares are going to end up in the hands of hedge funds who will simply “flip” them; or investors upset that they never seem to get a large enough allocation of the hottest deals.
And then there was the Facebook (FB) IPO, in which pretty nearly everything went wrong. That’s why we now see the rare spectacle of a Congressional committee – the members of which always seem willing and eager to jump on any issue that will get them some headlines and face time on television during an election season – asking the SEC to address a series of questions about the fairness of the IPO process.
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