Module III· ECM — IPO ProcessIntermediate
Question
What is a broken IPO, and what are the consequences?
Answer
A broken IPO trades below issue price after listing. Consequences include reputational damage, investor frustration, reduced ability to raise follow-on capital, pressure on stabilization, negative media, and potential issues for future sponsor exits. It may reflect overpricing, weak market conditions, poor allocation, or a flawed equity story.