With all the interest surrounding the Twitter IPO we were intrigued on why Goldman Sachs was chosen as lead book-runner. We took a look at the top tech IPOs launched in 2011 and 2012 . On each of those top deals, banks made around $300+ million in deal fees in each year.
Top bank fees in both 2011 and 2012 mainly went to Morgan Stanley, Goldman Sachs, JP Morgan, Deutsche Bank, Credit Suisse and Allen & Co. Goldman Sachs has mostly played a second lead role to Morgan Stanley on major IPO deals like Zynga and Facebook. The fact that Twitter’s current CFO took Zynga public and Morgan Stanley’s issues with the Facebook IPO, is why
we believe Goldman Sachs was given a shot at leading the Twitter IPO. We speculate Allen & Co will also play a role given its connections in the industry. Morgan Stanley will probably still be in the top lead book-runners with its strong deal experience and retail arm to distribute all those millions of shares efficiently.
How many banks in total will be involved? You probably need a lot of banks to handle the large amount of share distribution and demand. Facebook
had 33 banks on its IPO 11 lead and a whopping 22 co-manager banks for its IPO. Zynga
, had a much smaller bank group for its IPO. If Twitter is valued at $10 billion and raises about $1 billion then bank fees will probably be between 1.0%-2.0% ($15 Million).