台湾大学：《财务管理》（英文版） Chapter 14 How Corporations Issue Securities

Fundamentals of Corporate Finance Third edition Ch apter 14 How Brealey Myers Marcus Corporations Issue ndamentals of Corporate Finan Securities Brealey Myers Marcus slides by Matthew will IrwinMcGraw-Hill CThe McGraw-Hill Companies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 1 Irwin/McGraw-Hill Chapter 14 Fundamentals of Corporate Finance Third Edition How Corporations Issue Securities Brealey Myers Marcus slides by Matthew Will Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc.,2001

14-2 Topics Covered sVenture Capital SThe Initial Public offering sThe Underwriters GEneral Cash Offers sThe Private placement Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 2 Irwin/McGraw-Hill Topics Covered Venture Capital The Initial Public Offering The Underwriters General Cash Offers The Private Placement

14-3 Venture Capital Ⅴ enture Capital Money invested to finance a new firm Since success of a new firm is highly dependent on the effort of the managers restrictions are placed on management by the venture capital company and funds are usually dispersed stages. after a certain level of success is achieved Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 3 Irwin/McGraw-Hill Venture Capital Since success of a new firm is highly dependent on the effort of the managers, restrictions are placed on management by the venture capital company and funds are usually dispersed in stages, after a certain level of success is achieved. Venture Capital Money invested to finance a new firm

14-4 Venture Capital First Stage Market Value Balance Sheet(Smil) assets Liabilities and equity Cash from new equity 0.5 New equity from venture capital 0.5 Other assets 0.5 Your original equity 0.5 Value 1.0 Value 1.0 Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 4 Irwin/McGraw-Hill Venture Capital First Stage Market Value Balance Sheet ($mil) Assets Liabilities and Equity Cash from new equity 0.5 New equity from venture capital 0.5 Other assets 0.5 Your original equity 0.5 Value 1.0 Value 1.0

14-5 Venture Capital 今99 氵 Second Stage Market Value Balance Sheet(Smil) Assets Liabilities and equity Cash from new equity 1.0 New equity from 2nd stage 1.0 Other assets 2.0 quity from 1st stage 1.0 Your original equity 1.0 Value 3.0 Value 3.0 Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 5 Irwin/McGraw-Hill Venture Capital Second Stage Market Value Balance Sheet ($mil) Assets Liabilities and Equity Cash from new equity 1.0 New equity from 2nd stage 1.0 Other assets 2.0 Equity from 1st stage 1.0 Your original equity 1.0 Value 3.0 Value 3.0

14.6 Initial Offering nitial Public Offering(Po)-first offering of stock to the general public Underwriter- Firm that buys an issue of securities from a company and resells it to the public Spread -Difference between public offer price and price paid by underwriter Prospectus- Formal summary that provides information on an issue of securities Underpricing -Issuing securities at an offering price set below the true value of the security Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 6 Irwin/McGraw-Hill Initial Offering Initial Public Offering (IPO) - First offering of stock to the general public. Underwriter - Firm that buys an issue of securities from a company and resells it to the public. Spread - Difference between public offer price and price paid by underwriter. Prospectus - Formal summary that provides information on an issue of securities. Underpricing - Issuing securities at an offering price set below the true value of the security

14-7 Initial Offering Average Expenses on / IPOs from 1990-1994 Value of Issues Direct Avg First Day Total (Smil) Costs(%0) Return(%)Costs(%o 2-9.99 1696 16.36 25.16 10-1999 1163 9.65 18.15 20-3999 97 1248 18.18 40-5999 8.72 13.65 1795 60-79.99 8.2 11.31 16.35 80-9999 791 8.91 14.14 100-19999 7.06 7.16 12.78 200-49999 6.53 5.70 11.10 500 and up5.7275310.36 All Issues 11.00 1205 18.69 Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 7 Irwin/McGraw-Hill Initial Offering Average Expenses on 1767 IPOs from 1990-1994 Value of Issues ($mil) Direct Costs (%) Avg First Day Return (%) Total Costs (%) 2 - 9.99 16.96 16.36 10 - 19.99 11.63 9.65 20 - 39.99 9.7 12.48 40 - 59.99 8.72 13.65 60 - 79.99 8.2 11.31 80 - 99.99 7.91 8.91 100 - 199.99 7.06 7.16 200 - 499.99 6.53 5.70 500 and up 5.72 7.53 All Issues 11.00 12.05 25 16 18 15 18 18 17 95 16 35 14 14 12 78 1110 10 36 18 69 . . . . . . . . .

14-8 The Underwriters厘 Top U.S. Underwriters in 1998 Soil of total issues Merrill Lynch $304 Saloman brothers 225 Morgan Stanley De an Witter 203 Goldman sachs 192 Lehman brothers 147 CS/First b oston 127 JPMorgan 89 Bear stearns 83 Chase Manhattan 71 Donaldson lufkin Jenrette 61 All Underwrit ers $1820 Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 8 Irwin/McGraw-Hill The Underwriters All Underwrit ers $1,820 Donaldson Lufkin Jenrette 61 Chase Manhattan 71 Bear Stearns 83 JPMorgan 89 CS/First Boston 127 Lehman Brothers 147 Goldman Sachs 192 Morgan Stanley De an Witter 203 Saloman Brothers 225 Merrill Lynch $304 ($bil of total issues) TopU.S.Underwriters i n1998

14.9 The Underwriters厘 Top Non-USUnderwriters in 1998 Soil of total issues) Warburg Dillon Read 63.6 Merrill Lynch 52.3 Morgan stanley de an Witter 43.6 Goldman Sachs 42.5 ABN AMRO 41.5 Deutsche bank 39.0 Paribas 38.7 JPMorgan 36.0 Barclays Capital 31.1 CS/First b oston 25.7 All Underwrit ers $665.5 Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 9 Irwin/McGraw-Hill The Underwriters All Underwrit ers $665.5 CS/First Boston 25.7 Barclays Capital 31.1 JPMorgan 36.0 Paribas 38.7 Deutsche Bank 39.0 ABN AMRO 41.5 Goldman Sachs 42.5 Morgan Stanley De an Witter 43.6 Merrill Lynch 52.3 Warburg Dillon Read $63.6 ($bil of total issues) Top Non -U.S.Underwriters i n1998

14-10 General Cash Offers Seasoned offering - Sale of securities by a firm that is already publicly traded General Cash Offer- Sale of securities open to all investors by an already public company Shelf Registration-a procedure that allows firms to file one registration statement for several issues of the same security. Private placement Sale of securities to a limited number of investors without a public offering Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001

©The McGraw-Hill Companies, Inc.,2001 14- 10 Irwin/McGraw-Hill General Cash Offers Seasoned Offering - Sale of securities by a firm that is already publicly traded. General Cash Offer - Sale of securities open to all investors by an already public company. Shelf Registration - A procedure that allows firms to file one registration statement for several issues of the same security. Private Placement - Sale of securities to a limited number of investors without a public offering