Friends and Family Shares/Allocation

In an IPO (initial public offering) the management may choose to either distribute shares to “friends and family” or cause some of the IPO allocation to be directed to such persons. In many respects, this is designed to minimize founder’s tax liabilities by providing that person who might subsequently benefit from their largess, e.g., children, obtain the benefits of the IPO directly and thereby pay tax once rather than twice.

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