Bankers Set to take $200 Million from Facebook IPO

Facebook is close to filing papers that would announce their intent for an IPO this spring. It would be one of the largest and most anticipated IPOs of the last decade, with speculation that $10 Billion in capital could be raised. To put that in perspective, Groupon raised about $700 Million last year, and Zynga about $1 Billion. Back in 2004 Google only raised about $1.2 Billion in their IPO. So $10 Billion in new capital is a very large number. The problem with the current IPO market is that it is making founders and bankers very wealthy, but for average investors they are more fizzle than sizzle.

If Facebook were to raise $10 Billion, it would mean over $200 Million in fees paid to whichever Wall Street Bank represents them. Not a bad haul for a few months of work. In the Groupon IPO, the founders and early stage investors were able to cash out on billions in stock. When Facebook goes public, Mark Zuckerberg will surely be one of the top 5 richest men in America. But, the long-term value for shareholders is incongruent with the wealth created for the bankers and founders, making it a an IPO market that should send red flags to the average investor.