We noted recently that the General Motors IPO (IPO news), which will be huge,  is more about bragging rights and prestige than actual profits. The government, to its credit, has wrangled a deal that features rock-bottom fees.

Breakingviews puts it in perspective: The average take on U.S. IPOs since 2005 is 6.7 percent of the amount raised. Assuming GM sold $10 billion and paid just 2.8 percent (the amount Visa doled out on its $19.6 billion offering two years ago, another mega deal) the bankers would share $280 million. As it stands, the led underwriters for the GM offering would make just $75 million.

So you have to ask is it worth it? It depends on how much trouble the deal is. Recall that when Google went public it asked for a massive Dutch auction. Morgan Stanley executives may not be so sure in hindsight whether they would do it again. But at the time, it was considered important strategically. Breakingviews suggests to think about it is as a privatization, not an IPO. That makes the low fees more palatable, but I wonder if the banks will rue their decision if the deal underperforms. 

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