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Nasdaq specializes in helping launch other companies into public ownership. Now the exchange wants to join the club. Last April, it announced plans to stage an IPO sometime in the next year or two, which leaves entrepreneurs with two questions: What does the move mean for IPO-minded business owners? And what will the exchange do with the money?
Industry analysts say Nasdaq needs the capital to fund its ambitious overseas expansion, a process that is already underway in Europe and Asia. As Nasdaq gets closer to creating a global exchange, listed companies will enjoy a bigger pool of potential investors without having to list separately with a number of different foreign exchanges. Chris Karkenny, CEO of NetCatalyst, a Santa Monica, California, investment firm, describes the potential result as a breath of fresh air for entrepreneurs. "The broader the ability to trade in your stock," he says, "the higher your liquidity at the end of the day."
A global exchange will also require computing power, and analysts speculate that Nasdaq will use some of the money from its IPO to beef up its technological underpinnings. Once that task is accomplished, entrepreneurs will benefit from a seamless trading platform standardized across multiple markets, which will make buying and selling stocks easier for the global investor. More happy investors translates to more potential interest in the companies listed on the exchange. "Anything that would mean more trading or better pricing is good news," says Joe Bartlett, a corporate finance lawyer with Morrison & Foerster in New York City.
Some business owners may fear that earnings pressures from Wall Street will lead Nasdaq to loosen its IPO requirements so more companies are eligible to be listed, generating more listing fees for the company. Not likely, experts say. Nasdaq has been in the process of steadily tightening its criteria for listings and ridding the exchange of weak companies, and it's not likely to change course as a public company. "Nasdaq, particularly the people in its listing department, can be very tough," says Gary Simon, a securities partner with the Manhattan office of Jenkens & Gilchrist Parker Chapin LLP, "but it's become a much better institution as a result."