How does IPO valuation work?

The valuation of an IPO is a complex process that requires the analysis of various factors and the application of one or more valuation methods to determine the value of a company.

The IPO's merchant banker conducts the IPO valuation process. The merchant banker must examine all details of the company, including financial information, strengths, weaknesses, growth factors, risks, and governance, and use their experience and expertise to determine the fair value of the company.

The merchant banker is required to include all factors in the IPO offering documents that form the basis for pricing the IPO.

The IPO valuation is done using different methods.