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Dealing with Financial Turbulence: The Case of NanoDynamics
Volume 4, Issue 4
Authors:
Stephen Waite, Author of Quantum Investing
Abstract:
The postponement of the NanoDynamics, Inc. Initial Public Offering (IPO) in August 2007 was warranted given a significant, unanticipated increase in financial market volatility from abnormally low levels stemming from dislocations in credit and capital markets around the world. Accurately predicting so-called “fat-tailed” or “Black Swan” events in global financial markets is difficult, if not impossible. In times of extreme turbulence, when the VIX unexpectedly increases sharply, it is often prudent for investment bankers and their clients to wait for the financial shock to dissipate before re-launching an IPO, particularly relatively small public offerings of $100 million or less. Following such a course will increase the likelihood that all parties associated with the public offering benefit from the transaction.
Full Text (PDF)
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