Bill Ackman Raised No Money

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Generally the way an initial public offering works is that a company decides to sell, say, 10 million shares, representing 10% of the company, and then there is a negotiation about price. “This company is great and worth $5 billion, so you should pay $50 per share,” its bankers will tell investors.1 “Ehh the company is fine and worth $4 billion, so I’ll pay $40,” the investors will say. There’ll be debates and negotiation and posturing, the bankers will take orders at different prices, and eventually they will come to the company and say “we have orders for 20 million shares at $43 per share, and we think you should price the IPO there. That way, we’ll sell 10 million shares at $43,2 and a lot of people will be left wanting more and will buy shares in the aftermarket and the stock will trade up and everyone will be happy.” And the company will say “sure” and the deal will price at $43.