02 Feb Winter Shuts the IPO Window

It’s pretty rare but it happened. In January, there were zero IPO pricings. That hasn’t happened since 2011. But there is hope for private companies seeking an orderly path to exit for investors. First, of course every time the IPO window shuts, it eventually opens again. Second, these days there are alternatives! Let’s explore a few briefly:

• Stay private: if you can keep raising venture or private money at reasonable valuations, that might make the most sense. Or use Regulation D 506(c) and an online portal to promote a private offering to accredited investors.
• Sell: gets you a nice big check but too often at a valuation lower than you’d likely achieve as a public company.
• Reverse merger: there are challenges these days including the need for a $40 million follow on offering to avoid staying over the counter for a year, but still the fastest way to get public.
• Regulation A+ IPO: choose a smaller, simpler IPO approach which might be more successful when larger IPOs are not possible.
• Form 10 “Self-Filing”: Avoids shell merger issues, lets you uplist as soon as you qualify, a contemporaneous PIPE can bring needed capital.

It sure is frustrating when you spend months planning a large IPO and the market unexpectedly changes. That’s why companies should consider the alternatives even when the IPO window lets the breeze in.