IPO duopoly stokes concerns

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Bloomberg notes that either Morgan Stanley and Goldman Sachs "has been the primary manager on every high-profile technology IPO in the past year," including LinkedIn, Groupon, Zynga and Yelp.

Morgan Stanley of course has been tapped to lead the Facebook's IPO, while Goldman Sachs will act as a main underwriter as well. This would appear to be an example of the winner-take-all economy, where big advantages accrue to market leaders, which makes it hard for others to break in. Collectively, the two firms have a lot of expertise, and the chances of going with one of them can reduce your changes of a bad result. They have the secret sauce. That's the perception anyway, which doesn't sit well with Frank Quattrone.

He was quoted at a recent conference, saying that "There's a perception in the marketplace that Morgan Stanley and Goldman Sachs are the only real worthwhile, safe bookrunners. I wouldn't feel forced to impose this underwriting duopoly on yourselves."

To be sure, one big difference between the dot.com boom of the yesteryear and the dotcom boom of today is the lack of diversity in the underwriting community. Back then, you have the "four horsemen," which were real powers, in addition to the big bulge bracket banks, which back then included Quattrone's old firm, Credit Suisse First Boston.

There's no doubt Quattrone would like to lead manage a few deals via Qatalyst, which has been active as a secondary underwriter on many deals.

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