Companies going public typically issue 15 – 30% of the company’s shares to the public. So, at 4% fees on 30% of a $100 billion company, Goldman would get a $1.2 billion payday in fees.
You think I'm being unrealistic thinking that Facebook would be worth $100 billion by 2012? OK. Let's say the company stays valued at $50 billion. So Goldman has made nothing as a firm on its $450 million investment. Too bad, so sad. In that worst-case scenario it will have to comfort itself with $600 million in fees from the IPO underwriting.
Heads Goldman wins, Tails Goldman wins.
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