This screenshot comes from Groupon’s amendment to its S-1, and it shows the enormous fees Groupon had to pay to go public.
The final tab was $5.7 million to the SEC, FINRA, NASDAQ, lawyers, accountants, and others.
That’s a lot of money, but it doesn’t even factor in the investment banking fee. The investment bankers take 7% of the IPO, or because its raising $700 million, in this case, $49 million.
Investment bankers get more than that, though. They get a secret money maker called the “green shoe,” which means they can buy an additional 15% of the 35 million shares (5.25 million) at $20, then sell into the market at wherever it trades.
If the stock trades at, say, $30, and the banks dump the whole over-allotment option at the level, they will make an additional $50 million.
That’s more money out of Groupon’s pocket and into the investment banks’. It’s just awesome to be a banker!