For each dollar offered to the IPO investors, the selling shareholders collect less than 70 cents (= 823.7 / 1'179.1). These numbers show that an IPO is an expensive way to raise money. Of which money left on the table: 309.7 million.Of which underwriter discount: $ 38.7 million.Of which direct costs to external advisors: $7 million (assumption).Net proceeds collected: $823.7 million (see above).Total value offered to IPO investors: 41.4 million shares at a post-IPO price of $28.48 = $1'179.1 million.Total cost of going public: The difference between the total value offered to the IPO investors and the net proceeds collected by the selling shareholders is $356 million.Money left on the table: Expressed in dollars, the IPO investors made $309.7 million (= 41.4×(28.48 − 21)) on the first day of trading.The first-day return therefore amounts to approximately 36% (= 28.47/21 − 1). First-day return (Underpricing): The IPO investors bought at $21 on the primary market the stock closed at $28.48 at the end of the first trading day on NASDAQ.Proceeds to Dropbox: The remaining proceeds, 639.1 million (= 823.7 − 184.6), go to Dropbox.Proceeds to original investors: Assuming the original investors are subject to the underwriter discount as well (often, the issuer pays their underwriter discount), original shareholders receive a total of $184.6 million (= 9.2 × 20.0655).were approximately $7 million, the firm's net proceeds are therefore around $823.7 million (= 830.7 − 7). Assuming that the fees for external auditors, lawyers, etc. Net proceeds to Dropbox and original shareholders: After of the underwriter discount ($38.7 million) Dropbox and its original shareholder collected proceeds of $830.7 (= 869.4 − 38.7).In total, the underwriter discount therefore amounted to $38.7 million (= 41.4 ×(21 − 20.0655)). Underwriter discount: With an underwriter discount of 4.45%, the syndicate bought the shares from Dropbox and the original shareholders at a price of $20.0655 (= 21×(1 − 0.0445)).The gross proceeds from the IPO were therefore 869.4 million. Gross proceeds: In total, the underwriters placed 41.4 million shares (including the greenshoe option) at a price of $21.The following graph summarizes the rough structure of Dropbox's IPO: Closing price on the first day of trading on NASDAQ: $28.48.Issue price: Original price range of $16 - $18.Greenshoe option: 5.4 million new shares (exercised).
Shares sold by existing shareholders: 9.2 million.Newly issued Dropbox shares: 26.8 million.Total number of shares sold (excluding greenshoe): 36 million.
Here are some key characteristics of the offering, most of which are from the firm's Final Prospectus: To close the discussion of the IPO process, let us go back to Dropbox's IPO in March 2018 on the NASDAQ.
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