Companies Embrace IPO Alternatives by Maxwell Murphy


The topic of the journal is straightforward and easy to understand. It almost gives you an idea if what to expect as you read through the journal. The author brings an interesting side of companies that is yet known by the public. As he states majority of the big companies are shying away from IPOs and instead are looking into other options such as being acquired by other equity suitors either private or public. He has given an example of Ballast Point Brewing & Spirits Inc. that didn’t hold an IPO but instead sold itself to Constellation Brands Inc. To validate his point, Murphy (2016) compares the number of IPOs completed so far this year against the same period last. The number has dropped to 96 from 170 last year, a decline by 44%. The amount raised has also dropped by 43.2% from $ 30.3 billion last year to $ 17.2 billion this year.

Some companies would also want to capitalize on the availability of private capita, which according to the author, has increased from $ 1.39 trillion in 2015 to $ 1.46 trillion this year.

Those opting out of IPOs give reasons such as expenses involved with IPOs as well as the thought of having to give quarterly records to the public as is expected by public companies. They prefer to give these reports to a small group of investors. Market volatility has also kept some firms off IPOs.

There are numerous examples of the companies as well as their data. The article can be easily understood even by one who has no prior experience in business. The author would have improved this piece even by providing more analysis of the topic. There are too many examples provided and less analysis. As you read through every sentence, you find numbers and more companies but you rarely find explanations on what the numbers really tell.

This article brings to light the other alternatives to IPOs. Here we see that more and more companies are opting for selling out as opposed to going public which has been the norm for a while. A company should determine what it is that they want and how they want it. If going public works for them, then they should and if not they should look for other ways of raising capital.

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