- How is the offering price determined?
The price is normally based on such factors as the company’s financials, products and services, income stream, as well as the demand for the shares and current market conditions.
The underwriter must determine a fair offering price which takes into consideration the need for the company to raise capital while offering the new issue at a price which represents a fair value of the shares.
The offering price and/or number of shares issued could be raised or lowered from what is described in the preliminary prospectus. Additionally, the offering can be delayed or postponed based on unfavorable market conditions.