Posts Tagged ‘IPO’
Where have all the IPO’s gone?
Lately I’ve been reading a lot about the recent lack of IPO’s, specifically in the tech sector. There have been only 4 tech IPO’s in 2008. That’s a really low number. Rackspace recently did an IPO, but it tanked. That’s not good news for little tech companies with a big IPO dream they hope will happen in the next year or so.
Most VC’s get into a deal with the hope of an IPO exit. Obviously that isn’t happening. That’s somewhat concerning for young companies like DataSync who need that mechanism to work to keep capital on tap.
It appears private equity has been eating most of the deals. Yes – big, mean, massive private equity firms that will do deals the size of a typical IPO. Is this good news or bad? We think it’s interesting, and not necessarily bad or good. What we do know from our experience in business consulting is that Sarbanes-Oxley is a pretty menacing issue for smaller IPO’s (typical for technology companies). The administrative overhead of being a public company is enough to kill the interest of a lot of companies from undertaking the task.
We think that the market will correct the regulatory requirements eventually, and the IPO market will take a turn for the better. Until that happens, private equity has a bright future in finding value that public investors can’t access.
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