An initial public offering (IPO) is when private company stocks are sold to the public for the first time. Some of the main advantages of turning into a public company include gaining access to capital to fund growth, creating liquidity and potential exit for current owners, getting maximum value of the company, enhancing the company’s public profile, improving in debt finance terms, giving extra assurances for partners, suppliers and clients, enhancing loyalty of key personnel and providing superior efficiency of the business.
According to Dealogic, there has been $5 billion worth of IPOs completed so far this year, led by Xoom, an online money-transfer service. The first IPO of 2013, Xoom saw its shares jump 59 percent to $25.49 from its offering price of $16 in its debut on the Nasdaq market.
KPMG released a poll showing expectations for more investment in early- and expansion-stage companies, as well as a continued optimism remaining for IPO activity. The entrepreneurial community is optimistic about IPO activity, as 66 percent expect an increase and only 11 percent anticipate a decline.
SilkRoad, a provider of HR software solutions to SMB and enterprise-level businesses, recently selected JPMorgan Chase & Co and Piper Jaffray Cos to lead an IPO later this year, hoping to piggy-back on the IP of Workday Inc., a cloud-based financial management and human capital management software vendor, which raised $637 million in October.
SilkRoad, which also competes with Oracle (News - Alert) Corp and SAP AG, hopes to be the latest in a slew of IPOs from cloud-based companies, which let customers access their data and computing power from remote servers.
Image via Mashable
IPOs that are anticipated for 2013 include Twitter (News - Alert), which is valued at more than $10 billion, Pinterest, which is the fastest site to break the 10 million unique visitor mark and currently has more than 48 million users, and Evernote (News - Alert), the digital notebook that serves more than 45 million people and has raised more than $250 million in five funding rounds.
However, Phil Libin, Evernote chief executive, recently told VentureBeat he doesn’t expect an IPO until 2015 or 2016.
“It’s definitely not going to be this year. We want to build a 100-year company and don’t want to be acquired. Going public is the morally correct thing to do, but it’s a step you can get wrong,” he said.
Other tech IPOs to look out for this year are Square, the electronic payment app, Dropbox (News - Alert), a cloud storage provider that has been rumored to turn into a public company in the second half of 2013, Hulu, the online video streaming service, Box (News - Alert), a cloud storage company and Dropbox’s competitor, and Zendesk, an online customer service company that raised $86 million in funding in 2012.
Edited by Ashley Caputo