Why Banks Salivate Over Giant IPOs Like Snap’s

The video discusses the challenges and dynamics of IPOs on Wall Street, focusing on the low commissions banks earn from large IPOs like Facebook and Snap. It highlights the reasons banks still compete for these deals, such as meeting institutional demand, maintaining client relationships, and prestige. The video also addresses the decline in equity underwriting due to the rise of private capital and regulatory changes.

Why are large IPOs like Snap not considered a great business for Wall Street?

• Due to lack of investor interest.

• Because the fees on these deals are low.

• Due to high commission fees.

• Because the companies are too small.

What is one of the main reasons banks are eager to handle big IPOs?

• To increase their stock prices.

• To meet institutional demand.

• To reduce operational costs.

• To avoid regulatory fines.

How does the relationship with corporate clients benefit banks in IPO deals?

• It reduces the need for marketing.

• It helps banks secure future business opportunities.

• It allows banks to charge higher fees.

• It guarantees a fixed commission rate.

What is a significant factor contributing to the decline in equity underwriting?

• The increase in public capital.

• The decrease in global trade.

• The rise of private capital.

• The lack of technological advancements.

Why might some companies choose to remain private rather than go public?

• Because they can still raise money in the private market.

• To avoid paying taxes.

• To maintain control over their operations.

• To increase their market valuation.