Initial Public Offering Simulation

Teach the IPO process through valuation, book building and allocation

Students apply the core IPO concepts, from company valuation and roadshows to book building, final pricing and share allocation. They work as Underwriters and Investors, using valuation and investor demand to make and defend each decision.

4 - 6-hour team-based simulation
Analysis - Roadshow - Book Building
In-class, online or hybrid delivery

How the simulation maps to the IPO process

Three companies are preparing to go public. Each Underwriter team represents one company, while Investor teams assess and invest across all three opportunities. Underwriters structure, market, price and allocate an offering while Investors value, question, bid and compete for allocation.

Valuation and offer structure

Students analyse the company, apply comparable company valuation and determine the proposed price range and number of new shares.

Roadshow and bookbuilding

Underwriters present the investment case while Investors question assumptions and submit price and quantity indications.

Final pricing and allocation

Underwriters interpret demand, set the Final Offer Price and allocate shares after firm bids are submitted.

At a glance

Duration

4 - 6 hours

Run one intensive session or divide the activity across several teaching sessions.

Format

Role-based multiplayer

Teams act as Underwriters or Investors across three distinct IPOs.

Level

UG, PG and MBA

Adapt the depth of modelling and debriefing to the course level.

Course fit

Corporate Finance and Investment Banking modules

Use it to apply IPO valuation, book building, pricing and allocation.

Prerequisites

Basic multiples valuation

Students should ideally understand the fundamentals of relative valuation.

Delivery

Classroom, online or hybrid

The simulation also supports multi-session and homework-supported delivery.

Professor tools

Control, monitor and communicate

Manage players, adjust the timeline, monitor decisions and send alerts.

Optional assessment

Team inputs and outputs

Use submitted decisions and results as evidence where appropriate.

The art of IPO pricing

The offer price shapes demand, capital and post-listing performance.

1. Intro | 6 minutes:

Students begin with a short introductory video that explains the purpose of the simulation and how the IPO process will unfold. Before making any decisions, they become familiar with their role, objectives, available information, expected activities and measures of success.

Underwriter teams identify the company they represent and understand their responsibility for valuing, marketing, pricing and allocating its IPO. Investor teams review their objective of evaluating all three companies and deciding how to deploy their available capital. The stage gives students a clear view of the complete process and prepares them to enter the simulation with confidence.

2. Analysis | 1 hour:

During the Analysis stage, Underwriter and Investor teams work with different levels of information and prepare for the upcoming roadshows.

Underwriter teams analyse their assigned company using its financial, strategic and private case information. They complete the supplied valuation model, establish a proposed share-price range and decide how many new shares should be issued through the IPO. These decisions determine the initial structure of the offering and the amount of capital the company may be able to raise.

Underwriters also prepare their roadshow pitch. They must decide which financial results, valuation assumptions, growth opportunities and strategic messages will make the company attractive and credible to prospective Investors.

Investor teams initially receive limited information about all three companies, together with relevant comparable-company data and valuation models. Using this evidence, they conduct an initial assessment of each business and estimate what its shares may be worth.

Because their information is incomplete, Investors must also identify what they still need to learn. They prepare questions for the roadshows about the companies’ performance, valuation, growth prospects, risks and proposed offer terms.

3. Roadshow | 25 minutes:

The three Underwriter teams present their companies to the Investor teams. Their objective is to help Investors understand the business, become comfortable with the investment case and see how the proposed IPO valuation has been reached.

Each roadshow may cover the company’s activities, historical financial performance, valuation model, growth prospects, risks, proposed share-price range and number of new shares being issued. Underwriters decide which information is most relevant and how best to communicate the opportunity.

Investor teams attend all three roadshows, question the Underwriters and test the assumptions behind each offering. They use the presentations to fill gaps in their original analysis, compare the companies and gather the evidence needed to make prudent pricing and investment decisions.

The quality of the interaction matters. Underwriters must communicate persuasively while remaining credible, and Investors must ask focused questions rather than simply accept the information presented.

4. Price Indication | 40 minutes:

Investor teams now indicate the price at which they may be willing to buy shares and the number of shares they may wish to purchase in each IPO.

For each company, Investors can review information including the proposed price range, the total number of available shares, the weighted average indicated price and the proportion of the issue currently covered by demand. They must compare this market information with their own valuation and decide how much capital they are prepared to commit.

The indications are not yet final bids, but they provide Underwriters with an evolving picture of market demand.

Underwriter teams monitor the indications as they are submitted. They can see how much interest their IPO is attracting, where Investors are pricing the shares and whether the proposed issue is likely to be fully subscribed. During this stage, they should remain active in their discussions with Investors, answer further questions, provide relevant information and try to strengthen demand.

Before the stage ends, each Underwriter team must determine its Final Offer Price. The price should reflect the indications received, the strength of demand and the team’s original valuation. Underwriters may set the final price within, above or below their original range, but they must consider the trade-off between maximising proceeds and securing sufficient subscription.

5. Firm Bidding | 20 minutes:

Once the Final Offer Prices have been announced, Investor teams have one final opportunity to decide how many shares they will formally subscribe for in each company.

Investors reassess each IPO at its confirmed price. They may maintain their original level of demand, increase it where the Final Offer Price appears attractive or reduce it where the shares now appear expensive. Their firm bids should reflect their valuation, available capital and assessment of the relative attractiveness of the three offerings.

Underwriter teams observe the firm bids as they are submitted and monitor whether their issue is becoming under- or oversubscribed. They should remain engaged with Investors, respond to final concerns and encourage additional demand where the issue has not yet been fully covered.

This stage tests whether the Final Offer Price has successfully balanced the company’s capital-raising objectives with Investor appetite.

6. Allocation | 15 minutes:

After firm bids have been submitted, the shares must be distributed among the Investor teams.

Where an IPO is undersubscribed, the available demand can be fulfilled automatically because there are enough shares to satisfy the submitted bids.

Where an IPO is oversubscribed, the Underwriter team must allocate the available shares manually. It decides how many shares each Investor will receive, taking account of the bids submitted and its preferred allocation approach.

Investor teams can monitor the allocation process and communicate with Underwriters where they have received only part of the shares requested. They may advocate for a larger allocation and explain why they should receive a greater proportion of the issue.

The stage introduces an important practical judgement. Underwriters are not only completing a calculation. They must decide how scarce shares should be distributed among competing Investors.

7. Reflection | No time limit:

The final stage allows students to review the complete market outcome and compare their performance with other teams undertaking the same role.

Underwriter teams can review:

the Final Offer Price achieved;
the amount of capital raised;
the percentage of the issue subscribed;
whether all available shares were sold;
how closely the outcome matched their original objectives;
how their results compare with the other Underwriter teams.

Investor teams can review:

the total amount of capital invested;
how that capital was distributed across the three IPOs;
the shares allocated to them;
the percentage of their requested allocation achieved;
how their results compare with the other Investor teams.

The results provide a basis for discussing why teams made different decisions and how valuation, communication, demand, pricing and allocation affected the final outcome. Professors can use the stage to examine both performance and process, including which results came from a team’s own judgement and which depended on the actions of other participants.

Why professors use it

Apply comparable company valuation in context

Students use their valuation outputs to determine a price range and offer size, then revisit their assumptions after observing investor demand.

Make book building and pricing trade-offs visible

Indicative orders and subscription coverage show how investor demand informs the Final Offer Price and the likelihood of completing the issue.

Create evidence for comparison and debrief

Professors can compare offer prices, subscription levels, capital raised, Investor bids and allocations across teams.

What the experience looks like

Professors control the pace and monitor team decisions from the Admin Panel. Students move from role guidance and case analysis to stage-specific decisions and final results.

Control the simulation timeline

View all seven stages, their timings and the current position in the simulation. Start automatic progression, pause when teams need additional time, stop for a longer break and adjust the timeline when required.

Manage participants and teams

Add students, organise teams and assign Underwriter or Investor roles through Player Management. Professors can also use Login as Player to check what a particular student sees before or during the session.

Monitor decisions and support delivery

Use Live Monitoring to follow team inputs and decision tables as the simulation develops. Broadcast alerts to all students, identify where clarification may help and gather evidence for the final debrief without directing teams towards a preferred decision.

Case materials students work with

Underwriters receive detailed company information and a valuation model for their assigned IPO. Investors initially receive more limited information and comparable-company data across all three companies, creating an information gap that is reduced through the roadshows and Data Room.

Professors can use the materials to discuss disclosure, management optimism, valuation assumptions and the quality of Investor questioning.

Assessing growth assumptions

Students examine how geographic expansion, market access and expected growth support the company’s valuation.

Assessing the use of proceeds

Students consider how the proposed deployment of capital supports the company’s post-IPO strategy and investment case.

5 mins

Student Intro Video

Students watch a short video introducing the IPO process, their role, objectives and the decisions they will make during the simulation.

Assessment and scoring

Assessment is optional. Professors may run the simulation as an ungraded applied activity, a formative exercise or one component of a wider assessment.

Platform data can support academic judgement, but team results should be considered alongside the quality of the students’ analysis, modelling, communication and decisions. Platform outputs should not automatically replace academic judgement.

What professors can assess

• Bidding and capital deployment
• Allocation and role execution

How to interpret the results

• Compare capital raised with subscription achieved
• Test final pricing against investor demand

What professors can assess:

Bidding and capital deployment: Investors submit indicative and firm quantities. Professors can compare how their decisions changed after final pricing.
Allocation and role execution: Underwriters allocate shares where demand exceeds supply. The platform records the allocation, but the quality of communication and negotiation requires observation or separate evidence.
Optional individual assessment report: Students may be asked to submit a short written report outside the platform once they have reviewed and reflected on their scores. This is not automatically captured or graded by the simulation.

How to interpret the results:

Compare capital raised with subscription achieved: A higher offer price may increase potential proceeds but reduce demand. Capital raised should therefore be considered alongside the percentage subscribed.
Test final pricing against investor demand: Compare the Final Offer Price with the initial range, indicative bids, firm subscriptions and final subscription result.

Professor setup and delivery

Set up the teams, configure the timeline and start the sequence. The simulation can progress automatically, while the professor remains able to adjust the schedule, coach selectively and pause or stop the session when required.

Step 1

Set up participants, teams and roles

Organise students into teams of three to five. Assign three teams as the Underwriters for HealthCo, Techo and Utico Energy. The remaining teams act as Investors.

Step 2

Configure timings and session settings

Review the seven-stage timeline and adjust the schedule to match the teaching format and cohort.

Step 3

Start the simulation and manage controls

Select Play to start automatic progression. Use Pause when teams need additional time. Use Stop for a longer interruption.

Step 4

Monitor progress, coach selectively and prepare the debrief

Review team inputs and decision tables. Intervene where students misunderstand the mechanics or need clarification, without directing them towards a preferred price or bid.

Professor Resources

Everything needed to prepare, run and debrief the IPO Simulation is organised within the resources below.

IPO process and timeline
Pre-IPO preparation
Prospectus and offering price
Relative valuation
Roadshow
Book building
Price indication
Firm bidding
Subscription
Allocation

Creators of the IPO Simulation

These industry professionals were involved in the inception, creation, development, testing and optimisation of the simulation.

Investment banking, capital markets, PE, and corporate ratings experience at Morgan Stanley, S&P, and HPS Investment Partners. Holds a PhD in Quantitative Finance.

Gerhard Wörtche

Senior investment banker at Morgan Stanley with experience in M&A and TMT coverage across New York and San Francisco. Studied business at Kellogg.

Bharat Venugopal

Assistant Professor of Finance at Tilburg University, teaching corporate finance courses. Also lectures at TIAS Business School.

Fatemeh Hosseini

Worked in the finance department of Precomp Tools. Studied Engineering and holds an MSc in Corporate Finance from Bayes.

Aatmay Upponi

Corporate finance experience across M&A, structured finance, credit risk, and leveraged finance at Morgan Stanley, SMBC, and Citi. Holds a BSc in Economics.

Georgi Naydenov

FAQs

Valuation gives Underwriters and Investors an analytical starting point. The roadshow and indicative bidding stages then test those views against market demand, after which the final price influences firm subscriptions. Underwriters must finally decide how shares are allocated across the participating Investors. Students therefore see the IPO as a connected process in which one decision changes the next, rather than as three separate classroom topics.

The underwriter’s initial valuation provides a reference range, but the market outcome develops through interaction with investors. Roadshow questions and indicative bids reveal how investors interpret the company, its risks and the proposed valuation. Underwriters then use that demand information when setting the final offer price. This helps professors show that IPO pricing is not a mechanical valuation output: it is a decision made under uncertainty that balances issuer proceeds, investor demand and the credibility of the book.

Oversubscription shows that demand exceeded the shares offered at the chosen price, but it does not prove that the price maximised value for the issuer. Very strong demand may indicate that the offer was set too low and that more proceeds could have been raised. Conversely, some discount may be intentional to support participation and aftermarket performance. Professors can ask whether the underwriter used the bookbuilding evidence well, rather than treating the largest order book as an automatic sign of success.

The roles pursue different objectives and should not be assessed on one common outcome. Underwriters are responsible for valuing, marketing, pricing and allocating an issue, while Investors analyse all three companies, question the pitches, submit bids and compete for allocations. Professors should compare teams within the same role and then use the interaction between roles to explain the market result. A strong allocation for an Investor, for example, does not by itself show that the Underwriter priced the offering well.