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Non-Tech : Wit Capital - The way of the future? -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (4267)	5/29/1999 10:54:00 AM
From: Shadowed	Respond to of 16809

Goldman took a stake without any major risk. Read this from Barron's this week: " What happens to Wit Capital's offering could also tell a lot about the populist faith in the Internet. So far Wit Capital's biggest lesson has been in demonstrating the high price of connections. Recent amendments to Wit's filings show it has traded a lot for the bragging rights of having Goldman Sachs as a shareholder-partner. For a $25 million investment, Goldman received its 16.7% interest at the same $2.14-a-share insider price received by its original venture capital banker, Capital Z Partners, which is owned by Steven Gluckstern. Wit admits to yearning for the "increased stature" that a close relationship with Goldman could bring. But what about prospective competition from the underwriting giant? Goldman can observe Wit Capital's board meetings, and remains under no obligation when pursuing its own strategic course. The prospectus clearly mentions Goldman being allowed to compete "directly against" Wit. In return, Wit Capital receives no favoritism in Goldman deals. In fact, the firm's closeness to Goldman might scare away other underwriting business and prevent key future alliances, the prospectus says. Should another banking firm dare negotiate for a stake in Wit Capital, the agreement gives Goldman the right of first refusal on the stock. In return the world's leading underwriter has promised not to buy more than a 25% interest in Wit Capital for the next three years. "For Goldman Sachs this is a great deal," says Tom Taulli, author of Investing in IPOs. "I'm not so sure it's such a good deal for Wit Capital stockholders."