Make IPO harder?

[lagrelax]

This is maybe a more general game-play suggestion but also a good improvement in the upcoming banking DLC. In the current set-up, bring a subsidiary to IPO is basically zero-cost. And the valuation usually gives a 1.5x PB ratio. This somehow turns to a free cash source. I can spin off any unprofitable firms (even buy those from AI), do an IPO and then liquidate all the shares. This would give me a ~20% returns eventually after considering the depreciation of the sale of shares, and most importantly, risk free!

In a more cheating way, you can let the subsidiary company use up all the credit limit and then create its own subsidiary, and inject all its cash to it. Then merge that company with your own. So you get all the cash and only left an empty company with no cash and all debts. And AI are still buying them in the market!

This is definitely a loophole and actually it can be easily fixed. There already characteristics of company in game can be leveraged to control IPO, like years of operations, revenue etc. And it is more realistic, no country would allow condition-free IPO!

[Berbe]

That is indeed a good idea, as part of a larger project to fix loopholes, starting with the easiest.

In reality, the US institutions went after abusive IPOs related to cryptocurrencies, not that long ago...

It seems Capitalism Lab is based on US regulation, unless I am wrong, so it would be logical to proceed as lagrelax suggests based on US Rules & Regulations.

[xielinshan]

agree，Roadshow fee，Acounting Fee，Lawfrm fee，and Fund service Fee，total cost15%maybe is a good setting。More fun

[megapolis]

oh, by the way, talking about IPO. I have found a bug recently. I was trying to make IPO of a company worth around 9B. As a result, I issued more than 1 billion shares. Knowing that there's a limit of 1 billion shares, it is a bug. (Especially knowing that I was hoping for $100 price per share instead of $10, I was quite disappointed)

[Berbe]

oh, by the way, talking about IPO. I have found a bug recently. I was trying to make IPO of a company worth around 9B. As a result, I issued more than 1 billion shares. Knowing that there's a limit of 1 billion shares, it is a bug. (Especially knowing that I was hoping for $100 price per share instead of $10, I was quite disappointed)

That's a bug report, best suited either in Technical Support or Subsidiary DLC fora. The risk is polluting the thread and turning the subject away.

[Arcnor]

I'll freely admit that at times I've used subs to max out their credit and then transfer the cash to the parent via a new sub and IPO. I agree though its basically a cheat and some regulations should be put in place to control this process. However, along with those new rules, there should be an ability to move funds up from a Sub to Parent at will. Often my subs become my cash cows focusing on one business and I want to redistribute the cash from their operations to start new operations in a new sub.

[lagrelax]

I'll freely admit that at times I've used subs to max out their credit and then transfer the cash to the parent via a new sub and IPO. I agree though its basically a cheat and some regulations should be put in place to control this process. However, along with those new rules, there should be an ability to move funds up from a Sub to Parent at will. Often my subs become my cash cows focusing on one business and I want to redistribute the cash from their operations to start new operations in a new sub.

You can still do the transfer through a new sub here. My suggestion is that you can't have the sub IPO easily hence you are not able to get rid of it very soon. And it totally makes sense to do the same thing if you own 100% of a company and you basically can do whatever you want to. But you have to endure the cost also if you decide to use the sub's credit on the other hand

But once the sub get IPO, as other shareholders having an interest into it, then such transfer should be controlled. This could be a naturally follow-up enhancement after putting some constraints on IPO