OK, you have been backing, or founded, a “hot” startup and are just itching to get some party money (oh, sorry, plan for retirement-snicker) out and take it easy. How to do it? Sell it another company and be acquired? Merge with another company (may have to get their stock-yuk)? OR an IPO? Well the first two are probably really smart people so the valuation will be less, BUT the public…………well hello higher valuation. Quick, get Goldman on the line.
“When it comes to choosing an exit, some closely held technology companies are betting they can get richer valuations from a public listing than from being acquired.
Okta Inc. is one of at least five sale targets worth $1 billion or more — public or private — to have held deal talks in recent months that have fallen apart, people with knowledge of the matter said. The enterprise-software company based in San Francisco is now marketing its initial public offering to investors.
Separately AppNexus Inc., the New York-based advertising technology company, pursued what’s known as a dual-track process, according to people familiar with the matter, in which a company pursues both a sale and an IPO to determine the best exit.
After it couldn’t agree with potential buyers on a price, according to two other people, it decided to pursue the latter. It’s now on file confidentially for an initial offering, said one of the people, who asked not to be identified because the information is private.
Until recently, startups could count on generous private funding, with the associated generous implied valuations, and avoid the perceived hassle of being accountable to public investors. If a company had both exit options on the table — an IPO or an outright sale — the sale option looked attractive.
The pendulum is starting to swing the other way, according to Lise Buyer, founder of IPO advisory firm Class V Group.
The shift is at least partly due to the success of some recent listings, Buyer said. That includes Snap Inc.’s IPO, which was 10 times oversubscribed, people familiar with the matter have said, and has soared as much as 59 percent above its IPO price. Cloud-software maker MuleSoft Inc. jumped 46 percent in its debut this month.
“People get excited about the last transaction,” she said. “It’s a bit of, ‘What has the market done for me lately?’”
Since September, 17 U.S. technology and communications companies have raised $6.3 billion through IPOs, according to data compiled by Bloomberg, compared with 13 companies that raised $4.6 billion in the year-earlier period. The four new 2017 stocks have gained an average of 31 percent, outpacing the 4.6 percent climb in the S&P 500 Index, the data show…”
Read Full Article at Bloomberg