Alternatives to IPOs

There's a deafening silence in the public markets lately. Why? Because small and midsize businesses are looking elsewhere for capital."There have been incremental changes that, when you stack them up on each other, have altered the IPO scene and the IPO as an option for small businesses," says Dennis Sullivan, who works in Palo Alto, California, as the co-chair of the capital markets practice at securities law firm DLA Piper.

Take, for instance, the emergence of viable foreign markets. "Because of technology and the maturity and number of foreign markets, U.S. investors are more comfortable making investments abroad," says Sullivan. Not far behind are growing U.S. companies following the money trail to places like The London Stock Exchange's AIM market. "Smaller deals can get done [on the AIM], they're cheaper, and there [are fewer] liquidity requirements," Sullivan says. "The deals I've seen there could not have gotten done here." (For more on the IM, see "London Calling.")