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How Investment Banks Make Money on IPOs — and Their Built-In Conflict of Interest

Beginner Investing • 6 min

When a company goes public, the investment bank running the process typically earns 3-7% of every dollar raised. On a billion-dollar IPO, that's tens of millions of dollars in fees — which creates real incentives worth understanding.The bank's job is to price the IPO and find buyers, balancing the company's interest (raise as much money as possible) against institutional investors' interest (buy in cheap). Banks…

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