Marquee Names
The auction process is "only going to work for marquee names," said Michael Madden, former head of investment banking with Kidder Peabody & Co and Lehman Brothers Holdings Inc, now a principal with buyout firm Questor Management. "How are you going to build interest without a selling a concession? I don't think this changes everything."
Companies lacking the Google's cachet with individual investors may stick with banks that use a legion of brokers to drum up demand, he said.
"We believe as a firm that the traditional IPO process, having a distribution network and the capital to support transactions, still matters," said Paul Phillips, the head of technology investment banking at Banc of America Securities LLC.
During the auction, Google refused to provide earnings forecasts, and gave little new information during presentations promoting the offering. Google also said Brin and Page would sell stock in the IPO, unlike most founders, and would hold a special class of stock that gave them 10 votes for every share, compared with one vote for every share being sold in the IPO.
The Google auction is a historic precedent, said Dave Briggs, head of equity trading at Federated Investors Inc, which oversees US$25 billion.
"The genie is out of the bottle," he said. "It's a high-profile event. It will cause people to consider an auction as an option when they might not have thought about it."
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