The IPO range of value is developed in order to determine the degree of interest of potential purchasers of the stock. Ranges of value are not considered binding. Further, the pricing range can often shift during the period leading up to an IPO, depending upon market conditions and a company's performance. IPO markets are sensitive and cyclical. Attractive IPO markets occur when declining interest rates affect the yield on fixed income securities.
Investors then look to the public equity markets for higher returns on investment.
The window is considered to be open when the timing is right for an offering. Offering prices are affected by a number of other factors which result in a price that can be very volatile, particularly in the days just prior to the offering. A pre-offering discount to the determination of IPO value may be applied in order to entice institutional investors to buy the stock. Conversely, a prestige premium may be applied to the stock of certain types of industries or to particular companies within an industry. Often, underwriters' fees are negotiated just prior to the offering and can have a significant impact on the price.