A Dutch auction (or a descending price auction) contrasts with typical auction markets, where the price starts low and then rises as multiple bidders compete to be the successful buyer. In a traditional IPO, the underwriter (investment bank that oversees the process) gauges market interest to decide on an IPO opening price. In a Dutch auction for an IPO (Initial Public Offering) is a way of setting the price for a company's shares when it goes public. Investors submit bids stating how many shares they want to buy and the maximum price they're willing to pay. The company sorts all the bids, starting from the highest price to the lowest. The company then chooses the lowest price (assuming this is above the reserve price) that allows them to sell all the shares they want to offer. This price becomes the final price for the IPO. Everyone who bids at or above this final price gets the shares at that price, even if they were willing to pay more. Notably, Google's parent company, Alphabet used the Dutch auction method to go public in 2004.
Notably, Google's parent company, Alphabet used the Dutch auction method to go public in 2004.