Some Tech Companies Look to IPOs Instead of M&A

Bloomberg writers  Alex Barinka, Alex Sherman, and Alistair Barr reported this week that, “When it comes to choosing an exit, some closely held technology companies are betting they can get richer valuations from a public listing than from being acquired.

“Okta Inc. is one of at least five sale targets worth $1 billion or more — public or private — to have held deal talks in recent months that have fallen apart, people with knowledge of the matter said. The enterprise-software company based in San Francisco is now marketing its initial public offering to investors.

“Separately AppNexus Inc., the New York-based advertising technology company, pursued what’s known as a dual-track process, according to people familiar with the matter, in which a company pursues both a sale and an IPO to determine the best exit.”

The Bloomberg writes noted that, “Until recently, startups could count on generous private funding, with the associated generous implied valuations, and avoid the perceived hassle of being accountable to public investors. If a company had both exit options on the table — an IPO or an outright sale — the sale option looked attractive.

The pendulum is starting to swing the other way, according to Lise Buyer, founder of IPO advisory firm Class V Group.”

The Bloomberg article added that, “The shift is at least partly due to the success of some recent listings, Buyer said. That includes Snap Inc.’s IPO, which was 10 times oversubscribed, people familiar with the matter have said, and has soared as much as 59 percent above its IPO price. Cloud-software maker MuleSoft Inc. jumped 46 percent in its debut this month.”

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