Sunday, November 3, 2013

Twitter IPO Offers Banks an Entree to Spoils

The IPO for Twitter is to be of benefit to Wall Street in a number of ways. It is not just about the fact that the underwriter  will get a large fee for the IPO. The fee, as for example seen in the case of Goldman Sachs, is not a big deal. The IPO is set to be more of a platform for other big things to come. The fee that the Wall Street firms are earning will mostly go to the banks as a compensation for their aid in getting the buyers of the shares. The fees will also go to the companies that are failing and the meetings that will be held after the final pricing of the IPO. 

The benefits that the involved parties will get include the trading commissions from the investors and other parties that will be involved in the process of the issue and underwriting. The IPO is a platform for many other deals. The bankers, that are to  be involved in the Twitter IPO, will meet many potential customers for future deals. The banks' business of underwriting will also be largely boosted and this comes as a benefit to them at this time for the applicable regulations will not affect them at the moment. Underwriting makes good profits for the banks.

The top firms will have the opportunity to build new strong relationships with top men and women in the financial world, which they will meet selling the Twitter IPO. They become closer to the top management and, with the right words, they can get them to be available for the future deals. The Twitter IPO will be more about the opportunities that the Wall Street firms and the financial firms involved will get from the cooperation, and not all about the fee from the deal.

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