A B C D E-F G H I-J K-L M-N O P Q R S T U V-Z

G
Green Shoe
A typical underwriting agreement allows the underwriters to buy up to an additional 15% of shares at the offering price for a period of several weeks after the offering. This option is also called the overallotment and is exercised when the IPO is oversubscribed and trading above its offer price. The ability to buy additional shares also allows the underwriter to manage the aftermarket trading. The term comes from the Green Shoe Company, which was the first to have this option.

Gross Spread
When you purchase an IPO at the offer price, you pay no commission. Instead, the underwriter charges the issuing company a gross spread, which is the difference between the public offering price and what the issuing company receives. Typically, this spread is 7% to 8% of the IPO's offering price. The profitability of doing IPOs is one important reason why investment banks focus on developing this business.

Group Sold
When underwriters allocate the overwhelming bulk of IPO shares to a small group of large investors or an investment bank’s best clients. Usually indicative of both high demand from big investors and the desire of the issuer and banker to restrict distribution to a more knowledgeable and stable investor base.

Guidance
The pricing range, from lowest to highest, of an IPO. This usually pertains to Dutch Auction IPO’s.

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