Middle Market Deals and how to buy, sell and raise capital from $5 to $500 million

Ryan's comment suggested to me that I should add a bit to my comments about dutch auctions. 

Some have written that one of the big advantages of a dutch auction is that lower fees result.  Clearly, there is a lot I don't know, but I can't see how lower fees are inherent in this alternative process.  Well executed, I don't think there is much difference in the amount of work required--and therefore the costs associated--with one method of distribution over another.

In fact, the role of the investment banker is vitally important and should be well rewarded even in a Dutch Auction IPO.  For instance, we had a client a few years ago that spent in the neighborhood of a quarter million dollars preparing software and legal filings to conduct a self managed IPO.  Didn't work.  Period.

Note:  Paul Allen alerted us to the currency of this topic today, inspiring this post.

Dutch Auction:  A dutch auction is a long standing financial auction format, used for generations to price treasury auctions because it is such a fluid market.  Utah company Overstock.com was among the very first companies to go public using this method in 2002. 

Investment Bank W.R. Hambrecht has been the market champion for this style of public offering.

Basically, the offering works by soliciting from all interested investors, a price at which they would be willing to buy the offering.  These prices are then ranked in order to determine how low the bank has to go to sell all of the shares offered.