How Do Investment Banks Value Initial Public Offerings (IPOs)?
基于1993-2001年布鲁塞尔泛欧交易所49个IPO数据，发现投行常用多种估值方法，其中折现自由现金流法最流行，且发行价主要基于该方法并打折，而股利折现模型倾向于低估价值。
Abstract: We investigate the valuation and the pricing of initial public offerings (IPOs) by investment banks for a unique dataset of 49 IPOs on Euronext Brussels in the 1993–2001 period. We find that for each IPO several valuation methods are used, of which Discounted Free Cash Flow (DFCF) is the most popular. The offer price is mainly based on DFCF valuation, to which a discount is applied. Our results suggest that DDM tends to underestimate value, while DFCF produces unbiased value estimates. When using multiples, investment banks rely mostly on future earnings and cash flows. Multiples based on post‐IPO forecasted earnings and cash flows result in more accurate valuations.