IPOs for banks are repeat businesses: they'll be selling many different companies to the same institutional investors over the years. If you don't get your inve

IPOs for banks are repeat businesses: they'll be selling many different companies to the same institutional investors over the years. If you don't get your investors a pop, they'll be less likely to buy the next time around. The incentives are a little more complicated than just the underwriting fees — and the underwriting banks often both get a % fee and a flat fee, the latter of which is less useful for aligning incentives on pricing with the company going public (but useful for aligning incentives with the investors). That being said, seemingly-paradoxically, despite big pops being bad for the companies, they're actually typically good for employees. RSUs will typically turn into shares at IPO time and the entire bundle of shares will be taxed as income according to the listing price; a giant pop means you get higher dollar value shares while paying less tax, assuming you then hold onto them for a year and pay long-term capital gains tax on the difference between listing and pop price rather than selling immediately and paying short-term tax. Waiting a year to sell isn't that unlikely, since employees often aren't even allowed to sell at all for the first six months.