#Facebook now friends with Wall street: IPO

#10.

Well FB will now be friends with Wall Street.

The news on IPO on comes as Zuckerberg admitted Facebook has made "a bunch of mistakes" on privacy and agreed to overhaul its policy to make all major changes opt-in, following American regulatory criticism.

You might want to check out his post. 

http://blog.facebook.com/blog.php?post=10150378701937131

<No his post is not about any IPO>

Some of you might be interested to know what is going on. So here it is, in simple terms.

What exactly is an IPO?

Here Al's Ice cream was valued by the bank at $300,000. The same way, FB is valued at $100 billion. Here the investment bank splits this $300,000 into 50,000 shares with each share valued at $6. It means, i have to pay Al $6 to purchase 1 share. Here the bank sells only 50% of the shares hence Al raises $150,000. In a similar fashion FB wants to raise $10 billion. 

Why go public?

Its simple. When you are selling a share of the company, you get money. Well an IPO generally raises a lot of money.

Why now?

The Securities and Exchange Commission requires companies with more than $10 million in assets and 499 shareholders to register as public companies.

What will happen to you?

Nothing. There will be  better management now. So i think its good.

Disadvantages?

• Significant legal, accounting and marketing costs.  <FB has enough money for this, definitely>
• Ongoing requirement to disclose financial and business information. <FB will disclose stuff  one day before the IPO>
• Risk that required funding will not be raised. <FB is planning to raise $10 billion>
• Public dissemination of information which may be useful to competitors, suppliers and customers.

It is also possible that those higher ups in FB holding good amount of shares will sell them, quit their jobs and buy a beach house in Hawaii.

 Largest IPO's?

• General Motors $23.1 billion(2010)
• Agricultural Bank of China $22.1 billion (2010)
• Industrial and Commercial Bank of China $21.9 billion (2006)
• American International Assurance $20.5 billion (2010)
• Visa Inc. $19.7 billion (2008)
• General Motors $18.1 billion (2010)

Facebook is doing it for $10 billion.

Like and share if get it.