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The house always wins: how IPO banks are not threatened by direct listings

A look at what fees Slack might have paid in a traditional flotation shows how talk of IPO banks losing out to direct listings looks misguided.


Would banks that have traditionally charged young companies hefty fees to arrange their IPOs lose out from a greater move towards direct listings with no primary capital raising?

The question has been raised a few times in recent weeks, not least during Goldman Sachs's third quarter earnings call at which CEO David Solomon brushed off such concerns. Was he right to do so?

We are of course deep in the realms of "what if…?", but speculation with all the rigour of the back of an envelope suggests he might be right. Or, at least, it's far from obvious that banks will suffer much.

If anything, returns are much higher on a direct listing.

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