Behind the iWatt-Deutsche Bank divorce

June 29, 2012, 10:59 PM UTC

FORTUNE — A lot can change between the time when a company files for an IPO and when it actually goes public. Revised financial statements, additional underwriters, the specific number of shares being offered, etc.

One thing that almost always remains constant, however, is the bank that’s in charge (otherwise known as the “left lead,” due to its physical position on the registration document). Unless that bank disappears — think Bear Stearns or Lehman Brothers in 2010 — companies stick with the one that brung ’em.

That’s why it was so surprising when Reuters recently reported that Deutsche Bank (DB) had quit as left lead for an upcoming IPO for iWatt, a California maker power management semiconductors.

iWatt had filed for the $75 million offering just a few weeks earlier. Not the sort of deal that would generate major headlines, but it was still a (barely) profitable tech company with high-profile venture capital investors like VantagePoint Venture Partners and Sigma Partners. More importantly, Deutsche Bank likely would have banked a couple million dollars.

So what happened?

According to Reuters, the dispute centered around valuation. The article doesn’t get more specific, but its suggestion is that iWatt CEO Ron Edgerton felt the company was worth more than did Deutsche Bank.

Sounds like a good cause for divorce, but the story I’m hearing is much different. Multiple sources familiar with the situation tell me that iWatt and Deutsche had not yet begun to seriously discuss price. Instead, they were simply deciding whether or not iWatt should even move full-steam ahead with an IPO at this point in time. The company wanted to push forward, while the bank wanted to hold back.

It’s unclear is Deutsche’s hesitance was born of macro or internal issues. The former could include Europe’s daily proclivity for causing havoc in U.S. markets, or the fact that no U.S. company had gone public since Facebook priced in May 18 (note: that dry spell was snapped on Tuesday night). Indeed, many companies have postponed, or even withdrawn IPO registrations over the past several weeks.

The latter could simply be that Deutsche Bank had too much other business on its plate right now, and iWatt got pushed down the list of priorities.

“I don’t know if it was Facebook fallout or something else, but the whole thing was just very strange,” one source said. “From my perspective, everyone just should have waited to see if ServiceNow was able to price, since it also was a VC-backed, non-consumer tech company.”

[Note: ServiceNow (NOW) priced its IPO last night at $18 per share, and was trading at $23.86 as of this writing].

What we know for sure, however, is that several other bulge-bracket banks inquired about replacing Deutsche Bank as the left lead. The company currently is in serious discussions with at least one of them, although it also may simply promote Barclays Bank to sole lead underwriter status. Barclays had been listed to the right of Deutsche in the original registration statement, with smaller banks Canaccord Genuity, Baird and Needham & Co. on the second line.

Both iWatt and Deutsche Bank declined  to comment.

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