Take My IPO . . . Please!
Your public offering is dead in the water, and it doesn't look like the market will save it anytime soon. Now what?
Ah, 1999. The days when companies were going public like
raindrops, and stock prices were soaring through the roof before
the sound of the opening bell had even faded. The days when young
companies counted the minutes to their IPOs and then reaped the
multimillion-dollar benefits.
"An IPO was a cheap and easy way to raise money," says
Nick Hanauer, a founding partner of Seattle-based VC firm Second
Avenue Partners and an early investor in Amazon.com. "The
markets were frothy and irrational."
Skip ahead to spring 2001. Those heady days of 1999 now seem
like a distant memory. Of the 717 IPO filings in 2000, according to
business Web site Hoover's Online, 201 never saw an opening
bell. In fact, by fall 2000, more companies were filing to withdraw
their IPOs than were filing to go public. This year hasn't
fared much better: More than 50 companies withdrew their offerings
before March alone. While only a short time ago there was a mad
scramble to pick up new offers, even if they were overvalued,
burned investors now run from anything that smacks of an IPO.
AltaVista is just one high-profile name to pull its offering in
recent months as a result.
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Those Who Dared
Companies going public in this climate are finding that things
certainly aren't what they used to be. Take Loudcloud Inc., the
Silicon Valley tech company founded by Marc Andreessen of Netscape
fame, which went public in March only to have its shares
immediately fall below the IPO price of $6 per share. The
company's market value was estimated at $450 million, a far cry
from the $1.3 billion Andreessen wanted.
"The market is awful," says Mitch Mumma, a general
partner with VC firm Intersouth Partners in Durham, North Carolina.
"Companies that were considering going public a year ago
aren't considering it now."
For companies that are holding back, it's a waiting game.
Here are the stories of three that pulled their IPOs late last
year--and how they're hanging tough until the market
improves.
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