Time to Rethink the IPO

March 16, 2016

I opened up my news recently to see an article titled “The US IPO market has almost completely dried up.” This particular piece is in Business Insider, written by Bob Bryan. He goes on to say:

“Nobody wants to go public anymore.”

This is a travesty. There are investors seeking growth potential, and there are certainly growth firms that need capital to get to the next level in their growth cycle. So what’s wrong? Many people argue this is the aftermath of too much regulation and a skittish stock market.

I look at the problem also as a function of a strong fixation with the short term. Going public today, in a market that is perhaps more unpredictable than in the past, may lead to some interim unexpected results post IPO. But the IPO firm still gets money to grow, and if one considers the predictors of long-term survival and growth vs. short-term stock price peaks, then the decision to go public might just change. Using the funding from an IPO to drive innovation, secure an internal team that can propel growth and invest in the right leadership and partners will get a company a long way, and the sooner the firm starts and uses investment for these purposes, the better.

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