IPO Advisor

An IPO advisor is a firm hired to help a company navigate the process of listing on a public exchange for the first time. The advisor is usually an investment banking firm which has specialized knowledge of the company and the sector in which it operates.

Private companies wishing to go public and trade on a stock market exchange such as the New York Stock Exchange (NYSE) or NASDAQ undergo a process called an Initial Public Offering (IPO). The company will usually hire one or more IPO advisors to help them navigate the steps that are involved with the IPO process.

The advisor also has extensive knowledge of financial markets and can advise the company on a number of issues that will help determine the success of an IPO such as: whether the current environment is ideal for an IPO, what the appetite for the company’s shares might be, how many shares should be offered and at what price range the shares should be priced.

Key metrics that are used to gauge the success of an IPO include: how many times the issue is oversubscribed by investors, how much the shares increase in price on the first day of trading, and how many shares trade in its first day on the exchange. A newly listed company whose IPO advisors that have done their job well will see strong demand for their shares leading up to the listing, moderate trading in their shares once it lists and a nice pop in the closing share price of their stock relative to the level at which it was priced.