Tree Model

Examining IPO Valuation Methods – Market Comparables and Discounted Cash Flow By Daniella Gelman

An honors thesis submitted in partial fulfillment of the requirements for the degree of Bachelor of Science Undergraduate College Leonard N. Stern School of Business New York University May 2006

Professor Marti G. Subrahmanyam Faculty Adviser

Professor Brown Thesis Advisor

Examining IPO Valuation Methods – Market Comparables and Discounted Cash Flow

Daniella Gelman

New York University Stern School of Business

Executive Summary ............................................................................................................ 3 Abstract........................................................................................................................... 3 Methodology ................................................................................................................... 4 Conclusion...................................................................................................................... 7 Full Study............................................................................................................................ 8 A Notion of Value .......................................................................................................... 8 Sample ............................................................................................................................ 8 Sample of Firms: Russell 3000 Index, Initial Public Offering Additions ................... 9 The Underpricing Phenomenon.................................................................................. 12 Comparables Methodology .......................................................................................... 14 Modeling the Loser ................................................................................................... 16 Modeling the...