[manyhats]

Dutch auctions have been tried before, with mixed results, most notably by Google.

The article below reviews the GOOG IPO. It's not entirely accurate in all the details (e.g., that GOOG would have paid a 7% fee (pg 429) - in reality, it would have been much lower - GOOG was a large and hot IPO). Nevertheless, it's a good summary of the process.

http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?arti...

There's no longer a bank valuation "guarantee" for IPOs though, and hasn't been for many years. If an equity raise (IPO or otherwise) isn't going well, the offering price will be reduced until there's sufficient demand, or the issuer will pull the deal.

[bluedevil2k]

Google's auction was not actually a Dutch auction, but a second price auction. And despite the thought that it's the "perfect" way to do an IPO, the auction setup actually cost Google millions of dollars.

Here's a link to a more detailed explanation - http://optimalauctions.com/designing-a-better-google-ipo-auc... Tldr; demand is a curve, not a point (Note - I'm an auction design expert)