1. ©2012 McGraw-Hill Ryerson Limited 1 of 20 Learning Objectives 4.Analyze the dealer’s role in pricing corporate securities. Evaluate the influence of issued securities on earnings per share and market share price. (LO4) 5.Appraise the pros and cons of going public versus going private when raising funds. (LO5) 6.Describe a leverage buyout. (LO6)

2. ©2012 McGraw-Hill Ryerson Limited 2 of 20 Initial Public Offering (IPO), Private Placement and Leveraged Buyout (LBO) Initial Public Offering (IPO): – when a company sells its stock to the public for the first time – the company becomes publicly traded Private Placement: – selling securities directly to institutional and individual investors Leveraged Buyout (LBO): – money is borrowed to repurchase all the shares of the company resulting in a great deal of debt – when a company “goes private”, converting a publicly financed company into a privately financed one LO6

3. ©2012 McGraw-Hill Ryerson Limited 3 of 20 Figure 15-4 New equity financing, Toronto Stock Exchange, 2000-2010 LO6 Source: Investment Industry Association of Canada, “Equity Issues, 2010.”

4. ©2012 McGraw-Hill Ryerson Limited 4 of 20 Mergers, Acquisitions, and Privatization Investment dealers are key players in the mergers and acquisitions completed each year Privatization involves selling the selling of property held by governments through “public” share offerings LO6