Today’s entrepreneurs have to think “out of the box” when it comes to bringing their companies public. The traditional IPO route no longer exists for emerging growth companies.

After the collapse of Internet stocks in 1999 and 2000 broker dealers found religion and gravitated back to their roots; underwriting established name brand companies with histories of revenues and profits. Overnight, underwritings for emerging growth companies, especially technology deals, vanished from the landscape. Take a look at the chart below which illustrates the average deal size per IPO over the last nine plus years.

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1st Half 2008 Global IPO Review

Global IPOs

Global IPO volume slows, but larger deals leave their mark

While global IPO issuance slowed in the first half of 2008, there were distinct changes in market share and the types of issuers that could herald profound shifts in global IPO dynamics. Since Sarbanes-Oxley was implemented, prognosticators have opined that the United States would lose IPO share, but this has proved to be false thus far in 2008, thanks to Visa. Instead, it was the United Kingdom that lost share to exchanges in the Middle East and Asia, where economic expansion supported an increase in energy and infrastructure IPOs. The IPO market also saw a substantial decrease in the number of small IPOs, as investors were less inclined to take on the risk associated with less mature companies. Information provided by Renaissance Capital www.ipohome.com

US IPOs

Please note: The summary and returns data prior to 2007 do not reflect Renaissance Capital’s recent change to include all SPACs with a market cap of $50 million or more in its IPO statistics.

What the chart illustrates is that unless your company has a billion dollar valuation you probably are not going to attract an underwriter. So, exactly what are the alternative methods for taking your company public? We will review those methods over the next several days via my Blog postings.

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