Book building is a crucial step that cannot be skipped for your fundraising project. To state the obvious, book building is that process by which you arrive at the price of your security as a company when offering shares for sale in an IPO. It is firmly established that book building is the most efficient and popular process to price your securities in the market. It comes before reaching out to IEO Consulting Services, STO Development Services or ico development services. Obviously, you have to find out and establish your price before going about trying to streamline what you have to offer. You separately require ieo development service for your IEO, STO Consulting Services for STO and ICO software development for your ICO project, but book keeping and book running are relevant and constitute a crucial part in all these. Therefore, let’s look into the impact book building and book keeping have on your fundraising.
Book Building
Credibility Evaluation
Credibility is everything when it comes to business. People invest in you because they believe in you. They believe that your company has potential. And it is important that you get a feel of what the general public perceive about your product. Book building acts as an evaluation mechanism and helps ascertain the worth of the security you offer and your company’s credibility in the public sphere. Also, the entire process follows a wholesale basis.
Price Determination
To make it big with your offering, it is imperative that you know where you stand with your instrument. Book building facilitates a realistic, accurate perspective of investors’ response and commitments to the issue, thereby giving you clues and information to help you arrive at fixing a price for your instrument.
Demand Indicators
You are into this business for making some profit, if not a bulky one, in the first place. You need enough funding. You expect a handsome return of the time and effort you put in. Therefore, fixing the best price possible is the logical step towards that direction. And accurate perspective of the demand coming your way is the key. Only then you can get a picture of the highest market price for your shares and securities as well as the level of demand from promising investors.
Issuer’s benefit
Book building benefits the issuing company as it offers a scope for realistic pricing of the issue, the final price being decided 11 to 12 days prior to the opening of the issue. Another benefit is that book building offers the company an early access to capital. Furthermore, apart from bringing in liquidity and buoyancy, book building also facilitates a timely flow of information regarding issues, investors, syndicate members and lead managers.
Avoidance of the uncertain
For businesses, uncertainties impose risk and risk spells loss of profit and worse, even loss of capital, down the line. Therefore uncertainty is something a company or business cannot simply afford to accommodate. But with book building there is a possibility for a pre-sale of the issue which grants an early snapshot of the scheme of things, thereby doing away with uncertainties that may loom over the fate of the issue. Also, apart from facilitating transparency of allocation, you can enjoy a certain degree of flexibility with the price as well as size of your offering.
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