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To IPO or not to IPO, is that the question? Whilst staying private has been the focus of numerous high growth companies, perhaps it is a question of when, not if, they should seek to go public.
In this HBR piece by Pure Storage CEO Scott Dietzen, considerations around when to go public are provided (even if the exact answer to the question "When to go public?" seems to be the almost-tautological "when it stops being advantageous to stay private")
Key takeaways:
- Regulation has made going public more expensive.
- Going public as a smaller company makes fending off acquirers more challenging.
- Investors and employees will often push you to go public as they seek liquidity. The latter can be addressed by giving employees earlier options for liquidity.
- Customers may want you to go public in order to gain greater visibility into your public health.
- Sky-high private valuations, and the need for a valuation bump on going public, mean that IPOs may take longer.
We went public at a share price of $17 and an overall valuation of just over $3 billion. Since then our stock price has fluctuated—a reflection of the turbulent market rather than any negative surprises at Pure. We’re still reporting losses, but we’ve been able to make the case to investors that when you look at our growth rate, improving margins, and increasing operating efficiency, you see that this is a very healthy business. Pure is one of the fastest-growing enterprise technology companies the world has ever seen. We have to invest to maintain that—which is one reason that doing our IPO when we did made sense.
https://hbr.org/2016/06/pure-storages-ceo-on-choosing-the-right-time-for-an-ipo
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