

Facebook's $10,000,000,000 Question - bluedevil2k
http://online.wsj.com/article/SB10001424052970203518404577094370435238462.html

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DevX101
I want to see that traditional investment banking IPO die.

Investment banks surely deserve compensation for their role in securing
financing from institutional investors, but 7% of amount raised seems awfully
high for what amounts to a few months of low-risk work.

If Facebook gave this deal to a bank, they'll end up paying $700M, just so
that some well connected bankers will call their friends and tell them to
invest in Facebook. Fuck that.

And these banks can be vindictive if you decide not to go with them. Several
underrwriters told institutional investors NOT to invest in Google, simply
because Google shut them out. And although I can't prove it, I think
Overstock's decision to do a Dutch auction was partly why they've gotten
hammered by investors doing aggressive shorting on the company.

An overarching theme of the current era of the internet is the doing away with
middle-men. So maybe I don't want to see investment banks die, but I'd sure
want to see the influence of their gatekeeper role reduced significantly.

