NEWSWIRE - November 12, 2001

Topic: Common Stock and the Investment Banking Process

Source: "IPO Business Picks Up in Postattack Rally," by Kate Kelly, The Wall Street Journal, Monday, November 12, 2001, page C1.

Synopsis: In 1999 and 2000 the IPO market was hot. Many firms, mostly in the high-tech sector, were able to raise significant capital by selling stock to eager investors. It was not uncommon for these stocks to double in value during their first day of trading. However, as markets have cooled and declined significantly, the IPO market has slowed. The 3^rd quarter of 2001 was the slowest for IPOs since 1976. This article documents the resurgence in IPOs in recent weeks and discusses the improved market for new firms trying to go public during the upcoming months.

Discussion Questions:

1. What is an IPO? What other sources of financing are available to nonpublic firms?
2. Contrast the IPO market two years ago with the current market
3. From an investor's perspective, what are some important issues to resolve before purchasing stock in a firm going public?