Misplaced Pages

#95904

69-414: Laureate Education was originally created by Douglas Becker in 1998, as Sylvan International Universities, an operational division of Sylvan Learning Systems that would focus on post-secondary institutions. At the time, Sylvan was primarily focused on services for students in primary and secondary education through company owned and franchise locations. Sylvan International Universities' first acquisition

138-614: A $ 150 million equity investment in the firm to expand access to higher education in emerging markets. The firm, which had been present in Brazil since 2005, also bought Brazilian for-profit university chain Centro Universitário das Faculdades Metropolitanas Unidas for $ 412 million in anticipation of a growing middle-class in Brazil. The firm was among investors in Coursera , a provider of massive online open courses , citing

207-580: A better result. In addition to the extensive international evidence that auctions have not been popular for IPOs, there is no U.S. evidence to indicate that the Dutch auction fares any better than the traditional IPO in an unwelcoming market environment. A Dutch auction IPO by WhiteGlove Health, Inc., announced in May 2011 was postponed in September of that year, after several failed attempts to price. An article in

276-482: A company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment banks , who also arrange for the shares to be listed on one or more stock exchanges . Through this process, colloquially known as floating , or going public , a privately held company is transformed into a public company . Initial public offerings can be used to raise new equity capital for companies, to monetize

345-405: A digital learning system called SylvanSync, which provides lessons on tablets with instructors teaching lessons, which become more independent if the student progresses. Sylvan employs standardized assessments to place and monitor students and to evaluate instructors. Initial public offering An initial public offering ( IPO ) or stock launch is a public offering in which shares of

414-421: A firm's stock of patents mitigates this effect. A Dutch auction allows shares of an initial public offering to be allocated based only on price aggressiveness, with all successful bidders paying the same price per share. One version of the Dutch auction is OpenIPO , which is based on an auction system designed by economist William Vickrey . This auction method ranks bids from highest to lowest, then accepts

483-467: A preliminary prospectus, known as a red herring prospectus , during the initial quiet period. The red herring prospectus is so named because of a bold red warning statement printed on its front cover. The warning states that the offering information is incomplete, and may be changed. The actual wording can vary, although most roughly follow the format exhibited on the Facebook IPO red herring. During

552-554: A role as honorary chancellor of Laureate from 2010 until early April 2015. Clinton's publicly disclosed tax returns showed he was paid just short of $ 16.5 million for his work with the firm. His position included attending meetings on education issues, campus openings, and commencement ceremonies. In January 2013, the International Finance Corporation , a member of the World Bank Group , made

621-830: A total enrollment of 349,000 students, according to the firm. Mexico Peru These schools were previously owned or managed by Laureate Education, or offered courses in partnership with the firm. Sylvan Learning Sylvan Learning, Inc. (formerly Sylvan Learning Corporation ) consists of franchised and corporate supplemental learning centers which provide personalized instruction in reading , writing , mathematics , study skills, homework support, and test preparation for college entrance and state exams. Some centers also offer STEM courses in robotics and coding. Sylvan provides personalized learning programs and primarily serves students in primary and secondary education. Sylvan Learning began in Portland, Oregon in 1979 at

690-487: Is theglobe.com IPO which helped fuel the IPO "mania" of the late 1990s internet era. Underwritten by Bear Stearns on 13 November 1998, the IPO was priced at $ 9 per share. The share price quickly increased 1,000% on the opening day of trading, to a high of $ 97. Selling pressure from institutional flipping eventually drove the stock back down, and it closed the day at $ 63. Although the company did raise about $ 30  million from

759-494: Is called an underwriting spread . The spread is calculated as a discount from the price of the shares sold (called the gross spread ). Components of an underwriting spread in an initial public offering (IPO) typically include the following (on a per-share basis): Manager's fee, Underwriting fee—earned by members of the syndicate, and the Concession—earned by the broker-dealer selling the shares. The Manager would be entitled to

SECTION 10

#1732783977096

828-534: Is evidence that these shares were sold to public investors and traded in a type of over-the-counter market in the Forum , near the Temple of Castor and Pollux . The shares fluctuated in value, encouraging the activity of speculators, or quaestors . Mere evidence remains of the prices for which partes were sold, the nature of initial public offerings, or a description of stock market behavior. Publicani lost favor with

897-451: Is low enough to stimulate interest in the stock but high enough to raise an adequate amount of capital for the company. When pricing an IPO, underwriters use a variety of key performance indicators and non-GAAP measures. The process of determining an optimal price usually involves the underwriters ("syndicate") arranging share purchase commitments from leading institutional investors. Some researchers (Friesen & Swift, 2009) believe that

966-465: Is possible that the financial incentives of the advisor and client may not be aligned. The issuer usually allows the underwriters an option to increase the size of the offering by up to 15% under a specific circumstance known as the greenshoe or overallotment option. This option is always exercised when the offering is considered a "hot" issue, by virtue of being oversubscribed. In the US, clients are given

1035-399: Is to generate additional interest in the stock and a rapid rise in share price when it first becomes publicly traded (known as an "IPO pop"). Flipping , or quickly selling shares for a profit , can lead to significant gains for investors who were allocated shares of the IPO at the offering price. However, underpricing an IPO results in lost potential capital for the issuer. One extreme example

1104-530: The Dutch auction have also been explored and applied for several IPOs. The earliest form of a company which issued public shares was the case of the publicani during the Roman Republic , although this claim is not shared by all modern scholars. Like modern joint-stock companies, the publicani were legal bodies independent of their members whose ownership was divided into shares, or partes . There

1173-549: The K-12 business units, and the Sylvan name and trademark to Apollo Management , and in May 2004 changed its name to Laureate Education to reflect the new direction. Laureate took full control of Walden in September 2004, after purchasing remaining shares of the university for $ 109 million. The Baltimore Sun reported in 2004 that "Walden's enrollment grew tenfold from the time Laureate first invested in it four years ago." In 2007,

1242-556: The University of Liverpool and the University of Roehampton . The firm's long-term debt at the time was approximately $ 2.5 billion. It also provided the US Department of Education with letters of credit totaling $ 137 million for several schools, meant to safeguard federal student aid if the schools closed. In May 2019, Pública , a Brazilian news outlet, published an investigative report on Laureate Education's practices in

1311-408: The "issuer", enters into a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell those shares. A large IPO is usually underwritten by a " syndicate " of investment banks, the largest of which take the position of "lead underwriter". Upon selling the shares, the underwriters retain a portion of the proceeds as their fee. This fee

1380-507: The Dutch auction is still a little used method in U.S. public offerings, although there have been hundreds of auction IPOs in other countries. In determining the success or failure of a Dutch auction, one must consider competing objectives. If the objective is to reduce risk, a traditional IPO may be more effective because the underwriter manages the process, rather than leaving the outcome in part to random chance in terms of who chooses to bid or what strategy each bidder chooses to follow. From

1449-407: The Dutch auction system for its initial public offering. Traditional U.S. investment banks have shown resistance to the idea of using an auction process to engage in public securities offerings. The auction method allows for equal access to the allocation of shares and eliminates the favorable treatment accorded important clients by the underwriters in conventional IPOs. In the face of this resistance,

SECTION 20

#1732783977096

1518-473: The IPO are restricted from issuing any earnings forecasts or research reports for the company. When the quiet period is over, generally the underwriters will initiate research coverage on the firm. A three-day waiting period exists for any member that has acted as a manager or co-manager in a secondary offering. Not all IPOs are eligible for delivery settlement through the DTC system , which would then either require

1587-472: The NASDAQ on February 1, 2017. It initially offered 35 million shares, raising $ 490 million, and closed its first day at $ 13.25 per share. The IPO stated that the firm had grown to more than 1 million students and 200-plus campuses in 28 countries, and the IPO was in part a response to a global demand for more higher education among a rapidly growing middle class. It was only the third B Corporation to go public,

1656-669: The Sylvan Hill Medical Center Building. It was founded by former school teacher W. Berry Fowler, who had also worked with the educational company The Reading Game. By 1983, Sylvan had dozens of franchises and moved its headquarters to Bellevue, WA . In 1986, having over 500 franchises, Sylvan went public on the NASDAQ exchange and used funds to develop corporate learning centers in key cities. By July 1987, KinderCare , then based in Montgomery, AL, owned

1725-808: The United States, IPOs are regulated by the United States Securities and Exchange Commission under the Securities Act of 1933 . In the United Kingdom, the UK Listing Authority reviews and approves prospectuses and operates the listing regime. Planning is crucial to a successful IPO. One book suggests the following seven planning steps: IPOs generally involve one or more investment banks known as " underwriters ". The company offering its shares, called

1794-504: The Wall Street Journal cited the reasons as "broader stock-market volatility and uncertainty about the global economy have made investors wary of investing in new stocks". Under American securities law, there are two-time windows commonly referred to as "quiet periods" during an IPO's history. The first and the one linked above is the period of time following the filing of the company's S-1 but before SEC staff declare

1863-408: The assumption of independent private values (that the value of IPO shares to each bidder is entirely independent of their value to others, even though the shares will shortly be traded on the aftermarket). Theory that incorporates assumptions more appropriate to IPOs does not find that sealed bid auctions are an effective form of price discovery, although possibly some modified form of auction might give

1932-771: The country after 150 teachers were dismissed in December 2018. A dozen teachers accused Laureate of corruption ranging from forged documents to assigning teachers in classes outside of their area of expertise. In 2020, the firm announced a new strategy to review its operations, including possible sales of schools in Peru, Mexico, Australia and New Zealand. It then entered into an agreement to sell its Australian and New Zealand schools to Strategic Education, Inc. , and on September 11, said it would sell Walden to Adtalem for $ 1.48 billion. The Baltimore Business Journal reported that Laureate executives would receive $ 19 million in bonuses from

2001-416: The entire underwriting spread. A member of the syndicate is entitled to the underwriting fee and the concession. A broker-dealer who is not a member of the syndicate but sells shares would receive only the concession, while the member of the syndicate who provided the shares to that broker-dealer would retain the underwriting fee. Usually, the managing/lead underwriter, also known as the bookrunner , typically

2070-550: The fall of the Republic and the rise of the Empire . In the United States, the first IPO was the public offering of Bank of North America around 1783. When a company becomes publicly listed, the money paid by the investing public for the newly issued shares goes directly to the company (primary offering) as well as to any early private investors who opt to sell all or a portion of their holdings (secondary offerings) as part of

2139-451: The final IPO prospectus is for the issuer to retain one of the major financial "printers", who print (and today, also electronically file with the SEC ) the registration statement on Form S-1. Typically, preparation of the final prospectus is actually performed at the printer, wherein one of their multiple conference rooms the issuer, issuer's counsel (attorneys), underwriter's counsel (attorneys),

Laureate Education - Misplaced Pages Continue

2208-485: The firm became private after being acquired by an investor group led by Becker. Laureate continued to expand and acquire new institutions after becoming privately owned. By 2010, it owned more than 50 institutions, both campus-based and online, in 21 countries across Asia, Europe, and the Americas. According to the firm, it had a total enrollment of about 550,000 students. Former United States President Bill Clinton held

2277-479: The firm's Brazilian operations. The firm also said it had stopped enrolling students in its United Kingdom programs in 2020. The sale to Anima was completed in May 2021. In 2021, the firm focused on its continuing operations in Mexico and Peru and plans to safely return to in-class education, noting increased demand for higher-education in those markets. As of June 2021, the firm had reported $ 522 million in revenue for

2346-538: The first two being Etsy and Rally Software. In September 2017, Becker announced his resignation as Laureate's CEO effective January 2018. He was succeeded by Chief Financial Officer Eilif Serck-Hanssen. In 2018, the firm began divesting in several markets. It sold schools such as Université Internationale de Casablanca in Morocco, and Kendall College , as well as others in China, Malaysia, Italy and Cyprus. Its focus at

2415-421: The highest bids that allow all shares to be sold, with all winning bidders paying the same price. It is similar to the model used to auction Treasury bills , notes, and bonds since the 1990s. Before this, Treasury bills were auctioned through a discriminatory or pay-what-you-bid auction, in which the various winning bidders each paid the price (or yield) they bid, and thus the various winning bidders did not all pay

2484-401: The investments of private shareholders such as company founders or private equity investors, and to enable easy trading of existing holdings or future capital raising by becoming publicly traded. After the IPO, shares are traded freely in the open market at what is known as the free float. Stock exchanges stipulate a minimum free float both in absolute terms (the total value as determined by

2553-431: The issuance of equity (see stock dilution ) without incurring any debt. This ability to quickly raise potentially large amounts of capital from the marketplace is a key reason many companies seek to go public. An IPO accords several benefits to the previously private company: There are several disadvantages to completing an initial public offering: IPO procedures are governed by different laws in different countries. In

2622-458: The issued shares, the stock may fall in value on the first day of trading. If so, the stock may lose its marketability and hence even more of its value. This could result in losses for investors, many of whom being the most favored clients of the underwriters. Perhaps the best-known example of this is the Facebook IPO in 2012. Underwriters, therefore, take many factors into consideration when pricing an IPO, and attempt to reach an offering price that

2691-433: The larger IPO. An IPO, therefore, allows a company to tap into a wide pool of potential investors to provide itself with capital for future growth, repayment of the debt, or working capital. A company selling common shares is never required to repay the capital to its public investors. Those investors must endure the unpredictable nature of the open market to price and trade their shares. After the IPO, when shares are traded in

2760-586: The lead underwriter in the head selling group is also the lead bank in the other selling groups. Because of the wide array of legal requirements and because it is an expensive process, IPOs also typically involve one or more law firms with major practices in securities law , such as the Magic Circle firms of London and the white-shoe firms of New York City. Financial historians Richard Sylla and Robert E. Wright have shown that before 1860 most early U.S. corporations sold shares in themselves directly to

2829-668: The lead underwriter(s), and the issuer's accountants/auditors make final edits and proofreading, concluding with the filing of the final prospectus by the financial printer with the Securities and Exchange Commission. Before legal actions initiated by New York Attorney General Eliot Spitzer , which later became known as the Global Settlement enforcement agreement, some large investment firms had initiated favorable research coverage of companies in an effort to aid corporate finance departments and retail divisions engaged in

Laureate Education - Misplaced Pages Continue

2898-414: The majority of stock and moved the company to Alabama. Most of the staff did not relocate. In 1991 the company was taken over by R. Christopher Hoehn-Saric and Douglas L. Becker. In 1997 the company had an annual revenues of $ 246 million, and in addition to tutoring centers, Sylvan had expanded to offer teacher training, computerized testing, distance learning, and other services. In 2003, Sylvan Learning

2967-399: The market, money passes between public investors. For early private investors who choose to sell shares as part of the IPO process, the IPO represents an opportunity to monetize their investment. After the IPO, once shares are traded in the open market, investors holding large blocks of shares can either sell those shares piecemeal in the open market or sell a large block of shares directly to

3036-520: The marketing of new issues. The central issue in that enforcement agreement had been judged in court previously. It involved the conflict of interest between the investment banking and analysis departments of ten of the largest investment firms in the United States. The investment firms involved in the settlement had all engaged in actions and practices that had allowed the inappropriate influence of their research analysts by their investment bankers seeking lucrative fees. A typical violation addressed by

3105-427: The offering, it is estimated that with the level of demand for the offering and the volume of trading that took place they might have left upwards of $ 200 million on the table. The danger of overpricing is also an important consideration. If a stock is offered to the public at a higher price than the market will pay, the underwriters may have trouble meeting their commitments to sell shares. Even if they sell all of

3174-679: The opportunity to license courses through Coursera. Arizona-based Thunderbird School of Global Management announced a partnership with the firm in March 2013 to set up a joint venture that would provide capital support for Thunderbird to open multiple international instruction sites, create an undergraduate program, and expand its executive education and online programs. The partnership proved controversial. Some trustees and alumni expressed concerns that partnering with for-profit education could negatively affect Thunderbird's reputation, while supporters said working with Laureate would allow Thunderbird, which

3243-401: The physical delivery of the stock certificates to the clearing agent bank's custodian or a delivery versus payment (DVP) arrangement with the selling group firm. "Stag profit" is a situation in the stock market before and immediately after a company's initial public offering (or any new issue of shares). A "stag" is a party or individual who subscribes to the new issue expecting the price of

3312-575: The post of Presidential Counselor replacing U. S. President Clinton. Laureate reported revenue of approximately $ 4 billion in 2014. At the time, it owned 75 schools in 30 countries. Inside Higher Ed reported that total enrollment among the firm's institutions was 800,000, with its largest school, UVM, enrolling 120,000. In July 2015, Moody's rated Laureate's corporate bonds as high-risk and characterized Laureate as highly leveraged. Laureate filed for an initial public offering in October 2015. At

3381-443: The proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus . Most companies undertake an IPO with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide several services, including help with correctly assessing the value of shares (share price) and establishing a public market for shares (initial sale). Alternative methods such as

3450-636: The public without the aid of intermediaries like investment banks. The direct public offering (DPO), as they term it, was not done by auction but rather at a share price set by the issuing corporation. In this sense, it is the same as the fixed price public offers that were the traditional IPO method in most non-US countries in the early 1990s. The DPO eliminated the agency problem associated with offerings intermediated by investment banks. The sale (allocation and pricing) of shares in an IPO may take several forms. Common methods include: Public offerings are sold to both institutional investors and retail clients of

3519-452: The public, at a fixed price , through a secondary market offering . This type of offering is not dilutive since no new shares are being created. Stock prices can change dramatically during a company's first days in the public market. Once a company is listed, it is able to issue additional common shares in a number of different ways, one of which is the follow-on offering . This method provides capital for various corporate purposes through

SECTION 50

#1732783977096

3588-522: The quiet period, the shares cannot be offered for sale. Brokers can, however, take indications of interest from their clients. At the time of the stock launch, after the Registration Statement has become effective, indications of interest can be converted to buy orders, at the discretion of the buyer. Sales can only be made through a final prospectus cleared by the Securities and Exchange Commission. The final step in preparing and filing

3657-413: The registration statement effective. During this time, issuers, company insiders, analysts, and other parties are legally restricted in their ability to discuss or promote the upcoming IPO (U.S. Securities and Exchange Commission, 2005). The other "quiet period" refers to a period of 10 calendar days following an IPO's first day of public trading. During this time, insiders and any underwriters involved in

3726-466: The sale of Walden. By November, the firm had divested its universities in Australia, New Zealand and Chile, Laureate also announced that it would sell its Brazilian operations to Ser Educacional for $ 724 million. However, the firm received a higher offer of $ 765 million from Anima Holding during a 30-day period while it was allowed to solicit other offers. 11 institutions were included in the sale of

3795-549: The same price. Both discriminatory and uniform price or "Dutch" auctions have been used for IPOs in many countries, although only uniform price auctions have been used so far in the US. Large IPO auctions include Japan Tobacco, Singapore Telecom, BAA Plc and Google (ordered by size of proceeds). A variation of the Dutch auction has been used to take a number of U.S. companies public including Morningstar , Interactive Brokers Group , Overstock.com , Ravenswood Winery, Clean Energy Fuels, and Boston Beer Company . In 2004, Google used

3864-476: The settlement was the case of CSFB and Salomon Smith Barney , which were alleged to have engaged in the inappropriate spinning of "hot" IPOs and issued fraudulent research reports in violation of various sections within the Securities Exchange Act of 1934 . A company planning an IPO typically appoints a lead manager, known as a bookrunner , to help it arrive at an appropriate price at which

3933-458: The share price multiplied by the number of shares sold to the public) and as a proportion of the total share capital (i.e., the number of shares sold to the public divided by the total shares outstanding). Although IPO offers many benefits, there are also significant costs involved, chiefly those associated with the process such as banking and legal fees, and the ongoing requirement to disclose important and sometimes sensitive information. Details of

4002-414: The shares should be offered. There are two primary ways in which the price of an IPO can be determined. Either the company, with the help of its lead managers, fixes a price ("fixed price method"), or the price can be determined through analysis of confidential investor demand data compiled by the bookrunner (" book building "). Historically, many IPOs have been underpriced. The effect of underpricing an IPO

4071-419: The stock to rise immediately upon the start of trading. Thus, stag profit is the financial gain accumulated by the party or individual resulting from the value of the shares rising. This term is more popular in the United Kingdom than in the United States. In the US, such investors are usually called flippers, because they get shares in the offering and then immediately turn around " flipping " or selling them on

4140-930: The time was on its operations in Spain, Portugal, the U.S., and South and Central America. Laureate continued its divestiture in 2019, including ending its relationship with Istanbul Bilgi University in Istanbul, and selling University of St. Augustine for Health Sciences . In this period, it also closed or sold several schools, including Santa Fe University of Art and Design, Kendall College, Centro Universitário do Norte (UniNorte), Universidad Europea de Madrid, Universidad Europea de Valencia, Universidad Europea de Canarias, Universidade Europeia in Portugal and Instituto Português de Administração de Marketing in Portugal. Laureate also reportedly sold Université Internationale de Casablanca. Laureate also stopped enrolling new students at

4209-401: The time, it disclosed $ 4.7 billion in debt, and that funds raised from the IPO would be used to reduce its debt load. At the end of 2015, the firm became a certified benefit corporation , the largest at the time. In 2016, the firm sold its two Glion Institute of Higher Education campuses, and four campuses of Les Roches to Eurazeo for $ 384.9 million. The firm began trading at $ 14 per share on

SECTION 60

#1732783977096

4278-447: The underpricing of IPOs is less a deliberate act on the part of issuers and/or underwriters, and more the result of an over-reaction on the part of investors (Friesen & Swift, 2009). One potential method for determining to underprice is through the use of IPO underpricing algorithms . Other researchers have discovered that firms with higher revenues from licensing-based technology commercialization exhibit greater IPO underpricing, while

4347-491: The underwriter selling the largest proportions of the IPO, takes the highest portion of the gross spread , up to 8% in some cases. Multinational IPOs may have many syndicates to deal with differing legal requirements in both the issuer's domestic market and other regions. For example, an issuer based in the E.U. may be represented by the major selling syndicate in its domestic market, Europe, in addition to separate group corporations or selling them for US/Canada and Asia. Usually,

4416-399: The underwriters. A licensed securities salesperson ( Registered Representative in the US and Canada) selling shares of a public offering to his clients is paid a portion of the selling concession (the fee paid by the issuer to the underwriter) rather than by his client. In some situations, when the IPO is not a "hot" issue (undersubscribed), and where the salesperson is the client's advisor, it

4485-405: The viewpoint of the investor, the Dutch auction allows everyone equal access. Moreover, some forms of the Dutch auction allow the underwriter to be more active in coordinating bids and even communicating general auction trends to some bidders during the bidding period. Some have also argued that a uniform price auction is more effective at price discovery , although the theory behind this is based on

4554-683: The year. The Walden sale was completed in August 2021, following which the firm announced a $ 1.29 billion cash distribution that would be made available to eligible stockholders in October. As of September 2021, the firm maintained operations in Peru and Mexico and said it would continue to operate as a public company. Laureate International Universities have taught various subjects at both undergraduate and graduate level. Subjects covered by some of its remaining colleges include design, business, culinary and hospitality, and health sciences . As of June 2021, Laureate's continuing operations in Mexico and Peru have

4623-452: Was Spain's Universidad Europea de Madrid for $ 51 million in 1999. By 2001, the company had expanded to include institutions including Mexico's Universidad del Valle de México (UMV), Chile's Universidad de las Américas , Switzerland's Les Roches International School of Hotel Management , and 41% ownership of the online institution Walden University . In March 2003, the firm decided to focus exclusively on post-secondary education. It sold

4692-552: Was purchased by Apollo Management from Sylvan Learning Systems Inc., its parent company. (Sylvan Learning Systems Inc. shifted focus to post-secondary education , and to reflect that change was renamed Laureate Education in 2004.) In 2016, John McAuliffe was named as Chief Executive Officer. Over 28 franchised centers located in multiple states closed between 2008 and 2012, some very suddenly. Sylvan worked with franchisees to open more centers and planned to open 200 non-franchise locations. Most Sylvan locations utilize

4761-561: Was struggling financially, to maintain its independence. In December 2013, Laureate announced the election of three independent directors: Robert B. Zoellick , former World Bank president; Judith Rodin , president of the Rockefeller Foundation ; and George Muñoz , principal of the Muñoz Investment Banking Group. In 2015, Laureate named Ernesto Zedillo , the former president of Mexico , to

#95904