Breaking Even

(Image courtesy of Businessweek)

As the Detroit automaker, GM, starts to prepare its IPO (Initial public offering) for next month, our government is hoping to come close to "breaking even on its 2009 bailout of the carmaker"(WSJ). The government paid $40 billion for its 60.8% stake in the company and is hoping to make back at least $6 to $8 billion through the IPO (no guarantees there because if the government releases too many shares at once the price will fall) making the IPO about $10 to $12 billion with other sellers included. Analysts are having a hard time agreeing on the exact implied market value of the company, but have agreed GM will be valued anywhere from $50 to $82 billion (this does not necessarily mean the government will break even because $50 to $80 billion is what the entire company is valued, and the Government only owns 60.8% of it). I wish the best of luck to the automaker on the road show, beginning next week, because a lot of people are now in your hands.