4 ms·

I don't think this is accurate. All the companies I know would rather go public in order to enable investors/employees/shareholders to get some liquidity (and f

by pbreit 11y ago

I don't think this is accurate. All the companies I know would rather go public in order to enable investors/employees/shareholders to get some liquidity (and for the company to gain credibility). The secondary market, while fulfilling this desire to some extent, is still not even close to what you get in an IPO. The onerous regulations are still clearly depressing the IPO market.

tsotha 11y ago
The big payday isn't from an IPO any more, but rather from selling out to a larger company. Big tech companies have more money than they know what to do with.
- hkmurakami 11y ago
  One benefit of this to founders is that a M&A deal provides instant liquidity (barring earn outs), whereas an IPO largely prohibits you from selling off a large percentage of your stock.
  - tsotha 11y ago
    Yeah. The founder of one of our vendors sold his company for eight figures recently. His only obligation after the sale was to stay on for six months (at an exorbitant salary) while the management structure was integrated into the new parent company. Seems like an IPO is riddled with all sorts of waiting periods and notifications and paperwork people will want to sue you over if they lose money. I'd definitely go the buyout route if the price was right.
xenophon 11y ago
I work for a company that has deferred its IPO from plan, and from what I understand the SOX regulatory burden has very little, if anything to do with it. Credibility and providing liquidity for investors and shareholders are certainly important reasons why companies decide to go public. But there are also downsides to going public -- most notably the myopic time horizon of the public markets, which is a huge barrier to the kind of long-term product and user acquisition investments pursued by tech companies in particular. You can weigh these factors against one another, but ultimately the fundamental reason a company IPOs is to raise a large sum of money at an attractive valuation. Given that investors are lining up to help private companies meet this goal, the ancillary drivers you mention just aren't enough to push companies over the edge into the public markets.
mcintyre1994 11y ago
Sorry to dig on such a small part of your comment, but could you elaborate on the credibility comment? I'm just wondering, if you're pulling uber sized rounds and valuations - who are you lacking credibility from that matters? Can't going public damage credibility too if the pricing is wrong?
- pbreit 11y ago
  Money is part of it but having proper audits and publishing financials is more what I was referring to.

by pbreit 11y ago

tsotha 11y ago

The big payday isn't from an IPO any more, but rather from selling out to a larger company. Big tech companies have more money than they know what to do with.

hkmurakami 11y ago
One benefit of this to founders is that a M&A deal provides instant liquidity (barring earn outs), whereas an IPO largely prohibits you from selling off a large percentage of your stock.
- tsotha 11y ago
  Yeah. The founder of one of our vendors sold his company for eight figures recently. His only obligation after the sale was to stay on for six months (at an exorbitant salary) while the management structure was integrated into the new parent company. Seems like an IPO is riddled with all sorts of waiting periods and notifications and paperwork people will want to sue you over if they lose money. I'd definitely go the buyout route if the price was right.

xenophon 11y ago

I work for a company that has deferred its IPO from plan, and from what I understand the SOX regulatory burden has very little, if anything to do with it. Credibility and providing liquidity for investors and shareholders are certainly important reasons why companies decide to go public. But there are also downsides to going public -- most notably the myopic time horizon of the public markets, which is a huge barrier to the kind of long-term product and user acquisition investments pursued by tech companies in particular. You can weigh these factors against one another, but ultimately the fundamental reason a company IPOs is to raise a large sum of money at an attractive valuation. Given that investors are lining up to help private companies meet this goal, the ancillary drivers you mention just aren't enough to push companies over the edge into the public markets.

mcintyre1994 11y ago

Sorry to dig on such a small part of your comment, but could you elaborate on the credibility comment? I'm just wondering, if you're pulling uber sized rounds and valuations - who are you lacking credibility from that matters? Can't going public damage credibility too if the pricing is wrong?

pbreit 11y ago
Money is part of it but having proper audits and publishing financials is more what I was referring to.