IPOs create a buzz, but answering to shareholders is not for everybody
“Often initial public offerings are interpreted as symptoms of big things brewing and validation that the rest of the world is watching. Bold, buzz-worthy IPOs secure a spotlight and generous payday for the companies as well as the communities they’re stationed in. But it goes beyond that moment in time. It’s worth noting that public ownership comes at a cost, and the sparkle of the IPO can fade. Public companies spend great deals of time balancing the needs of long-term shareholders alongside the impulses of fast-money traders, and short sellers on the opposite end of the bet, eager to see the stock drop.
Last year, Forbes published an article titled: ’70 Billion Reasons For a Public Company to Go Private,’ as the formerly popular smartphone brand, BlackBerry, opted to return to its private roots in a last-ditch effort for survival. The piece warned: ‘If the public makes you rich beyond your wildest dreams when it buys your stock in an IPO, you then have to make sure the public gets a good return for gambling its retirement money on the fortunes of your shares.’
Interestingly, the value of ‘take private’ deals skyrocketed from $14 billion in 2012 to roughly $80 billion by August 2013, according to data provider Dealogic.”