During the late 1990s, once a week every new technology company enlisted themselves in the American Stock Exchange. These companies all followed a certain pattern; their stocks would rise so high at first only to see its stock price making a headlong dive after a decade. Many individuals were able to ride on this wave and made a lot of money out of this but lost everything soon after the dot com rage fizzled off. A lot of these companies went out of business. At present, technology companies, in the hopes that this present would be different from the past has made initial public offerings or IPOs. An initial public offering is the first sale of stock of a new company who was once private and has tried to go public, hence the selling of its stocks to the public.
There are more offers of IPOs in 2010 than in 2009 because of the financial crisis, but this is not that high compared to the offers made during the 1990s. Many are asking if in 2011 whether there will be an increase in the public offerings returning to the pre-recession days. The hot brands to look out for when it comes to tech IPOs are Facebook, Zynga and Skype to name a few. Economic analysts are still waiting in expectancy as to when these hot brands will go public since investors are more than willing and waiting in line for them. These same companies might also be planning on seeking additional venture capital funding.
For anybody who is interested in acquiring an IPO, you need to search S-1 forms filled with the “Securities and Exchange Commission”. Your company must also consider the advantages and disadvantages of going public. You need to be registered with a brokerage firm. This brokerage firm’s job is to notify investors of the IPOs.
The following are investor qualifications so that they can participate in an IPO:
• The investor must have a specified amount of money in their brokerage accounts.
• The investor needs to have a specified number of transactions.
The next step for those who are qualified is the need to sign up for an IPO notification service so that when an investment profile catches your eye, you can be alerted about them. In the previous years, the wait for a deluge of an iconic IPO that will wet the investor’s appetite was not met, but they never lose hope that they would encounter a moment like back in the 1990s, during the time the first tech company boom took place. For those who are enterprise managers, if they are contemplating an IPO, they need to properly select a board of stable performers who has good investment appeal that will generate the confidence of those who would be investing. Another critical factor that needs to be put in consideration is how they will convince the investors to take advantage of investing in technology companies.
A disadvantage of a tech IPO is in terms of the disclosing of your company’s vital and confidential information which includes financial details. This to some extent can give your competitors a view on the financial health of your company including your business strategies. You need the assistance of an experienced securities lawyer who can help you evaluate the pros and cons of participating in an initial public offering. You can also advertise your offering online or on television. You will need an IPO underwriter for this job.
Initial Public Offerings or IPOs are perceived by those who are in business to be a good way of securing money to expand their businesses without the need for acquiring third party debt. These public offerings on the stock market are a complex process. IPOs need months of preparation by a combination of highly skilled teams that are composed of commercial, financial and legal experts. An establishment of linkages between the company, selling analysts and buyers are vital to the success of this endeavor. Each of these key players has a role to perform.
Finally, the success of making a public offering does not end in the selling stage. Those who are in charge of selling should execute a good business plan to put into good use the proceeds of the sales. The key leaders should be emotionally and mentally able to handle the pressures of an IPO since it takes longer than you expect for your return of investment to roll in. You also need to keep a good relationship with your underwriter. Even if you are offering a great service, it can still be undervalued if you do not set your story straight or be open about what your company has to offer to the investment community. The stress here is on how your company’s value will be conveyed to the investor through an effective communication.