By:Sramana Mitra WSJ article "IPO Obstacles Hinder Startups" offers a good coverage of how IPOs are becoming tougher for small venture-backed companies. This raises the question, what should CEOs and early-stage VCs do, once a company has reached $100 M+ in annual sales? (Below this threshhold, it is absolutely undesirable to go public; investor courting, ongoing investor management, Sarbanes-Oaxley compliance related paperwork and massive expenses - being some key distractors ...) In general, by year 5 or year 6 in a company’s history, the Series A investors, the Founders, and the early executive team that is still around - get itchy to extract some liquidity. Today, given the sophistication, the available money, and the level of activity in the Private Equity industry, a late-stage / LBO fund could easily step in and provide the necessary liquidity. Liquidity, I believe, is no reason to go public prematurely. An enterprise that has built-in scalability should stay private, stay on course, and execute, execute, execute. If, however, the business does NOT have built-in scalability - and most don’t - they should absolutely NEVER go public. They should get acquired, and become part of a larger portfolio. Last year, 41 start-ups backed by venture-capital investors became publicly traded U.S. companies, down from 67 in 2004 and 250 in the boom year of 1999, according to research firm VentureOne. I would say, the recent numbers are much closer to what they should be. After all, how many enterprises really have built-in scalability in their business model? Most companies simply go public and then struggle, giving smart investors absolutely no reason to touch them, and hence, giving analysts no incentive to cover them! Rather, a secondary exit market for private placements of a chunk of the company’s shares held by early shareholders - is a far better alternative. Article Source: http://www.redsofts.com/articles/ Silicon Valley Entrepreneur and Strategy Consultant Sramana Mitra writes about Entrepreneurship, Business Strategy, Emerging Technology, Market Moves, and sundry other topics in her Blog "Sramana Mitra on Strategy". Read more of her writings at http://www.sramanamitra.com. More Articles from Business Category: Team Working - Personality Profiling Can Help How To Be More Successful By Using Effective Time Management Tools Are You Losing Focus? Use These Time Management Tips To Get It Back Is Your Company At Risk? Make Good Use Of A Certificate Of Insurance Partner Up In Business With A Joint Venture Agreement How Do You Avoid Online Survey Scams Available Mentoring Programs Learn to Control Your Retirement Investments, Earn Higher Returns, Invest in Real Estate, Franchises How Do You Create An Income From Online Surveys Why Are Online Surveys So Popular Tips To Starting A Successful Internet Business Do Your Employees Know The Ground Rules? The Qualities Of An Effective Executive Summary Planning Your Online Business Sources of Alternative Energy

Soft Categories
Audio & Mp3   Business & Finance   Desktop Enhancements   Games   Home & Education   Internet   Multimedia & Design   Security & Privacy   Software Development   System Utilities   Web Development