[7speter]

Don’t banks put a fair amount of work into evaluating the valuation of these companies whose equities they are putting out on the public market the first time? The company is putting their trust in the bank that the banks valuation isn’t too far off from what the market would think. There have been botched ipos where the price of the ipo was too high and the stock sunk like a rock, and also where they were too low and the company didn’t make as much on the offering as they could have. Don’t ask me how its done, because banks are the experts at these valuations (some combination of math and convincing the right group of people they want to get in on the offering at a given price) and thats why companies work with them on ipos :)