Case VIII on Chapter 23 IBs and VC Firms

LinkedIn Corporation (NYSE: LNKD) issued an initial public offering on May 19, 2011 and the final first-day closing price was $94.25. Based on the prospectus which LinkedIn filed to the SEC (http://1.usa.gov/jjMi0o or go to my facebook website), answer the following questions. 1. What were the total proceeds to the public from this offering? How much (in $ term and percentage term) did the underwriters take as fees and expenses? 2. Refer to the IPO of Amazon.com on page 615 in the textbook. What were the fees for Amazon as a percent of funds raised? Does a pattern emerge? 3. What was the market value of LinkedIn following its first day as a publicly held company? 4. Jeffrey Weiner is the C.E.O of the company, and he owned a significant number of shares. At the end of the first trading day, what was the value of his ownership in LinkedIn? 5. LinkedIn offers Class A common stocks in this offering. Is there any other class of common stock? If so, what is the difference between them? 6. It seems this company obtained some funds from a venture capital (VC) firm at the expense of ownership. Identify the VC firm, and find out how much they made during the IPO. 7. The issuer granted the underwriters the right to purchase additional shares of Class A common stock. What is the name of this right? If the underwriters fully exercise the right/option, what will be the total proceeds to LinkedIn? 8. What are the main reasons why LinkedIn decided to become a public company? 9. Identify the syndicate members for this IPO, and which investment bank seems to be a lead underwriter? 10. What are the potential competitors for LinkedIn in terms of (a) Professional Networks and (b) Recruiting (hiring solutions)?

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