How will underwriters price the nFusz IPO reverse 3 party merger with Sound Concepts?
All my own opinion, but I don’t believe the deal will priced differently from other IPO’s just based on the vehicle used to facilitate the merger. It will be priced like any other deal.
I believe it will be based on, among other things, the perceived value of the combined entity, demand for participation in the deal, general and specific market conditions, etc. I believe the IPO won’t be priced until right before the deal goes out, which provides time for the roadshow and other related news.
See below for some further pricing considerations:
“Another aspect of IPO valuation is industry comparables. If the IPO candidate is in a field that already has comparable publicly traded companies, the IPO valuation may be linked to the valuation multiples being assigned to competitors. The rationale is that investors will be willing to pay a similar amount for a new company in the industry as they are currently paying for existing companies.
In addition to viewing comparables, an IPO valuation depends heavily on the company's future growth projections. Growth is a significant part of value creation, and the primary motive behind an IPO is to raise more capital to fund further growth. The successful sale of an IPO often depends on the company's plans and projections for aggressive expansion.
Qualitative Components of IPO Valuation Some of the factors that play a large role in an IPO valuation are not based on numbers or financial projections. Qualitative elements that make up a company's story can be as powerful – or even more powerful – as the revenue projections and financials. A company may have a new product or service that will change the way we do things, or it may be on the cutting edge of a whole new business model. Again, it is worth recalling the hype over internet stocks back in the 1990s. Companies that promoted new and exciting technologies were given multi-billion-dollar valuations, despite have little or no revenues. Similarly, companies undergoing an IPO can bulk up their story by adding industry veterans and consultants to their payroll, giving the appearance of a growing business with experienced management.
Herein rests a harsh truth about IPOs; sometimes, the actual fundamentals of the business take a back seat to the marketability of the business. It is important for IPO investors to have a firm understanding of the facts and risks involved in the process, and not be distracted by a flashy back story. (For more, see "The Ups and Downs of Initial Public Offerings.")”
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