It’s hard to stay optimistic right now. What was supposed to be the best year for the IPO market since 2007 has taken a fast turn, with a dozen or so companies pulling the plug on their IPOs this month (or at least delaying them). The opportunity, excitement and shareholder wealth that comes with these events will have to wait, it seems. While it’s easy to succumb to the doom and gloom of the market conditions we’re experiencing right now, IR agencies, designated market makers and other companies involved in the IPO market shouldn’t rush to fret just yet. There are still plenty of reasons for optimism:
1. The year did get off to a great start: let’s not forget that the recent turn in the market ended a solid first half of the year for the IPO space. There was clearly demand for IPOs among investors (and companies ready for liquidity events). Those that delayed their dreams tended to do so because of market conditions, which means they’ll want to come back.
3. There’s an urge to rise above the market: it doesn’t make sense to dwell on short-term perspectives – an IPO is the start of something much greater. Tudou and Carbonite went forward with their IPOs, despite market volatility, and there can be benefits to going public even in today’s market.
4. High-profile action could still come: Groupon seems to be moving forward, although it’s too early to tell if the company will complete its IPO this year. Zynga appears to be headed in that direction, too. And then there’s Facebook: the social media giant is rumoured to be filing its S-1 in the fourth quarter of this year for an IPO by April 2012.
5. Investors will always need exits: the venture capitalists, former employees and other shareholders of pre-IPO companies won’t want to wait forever for their payouts. Even though tech companies seem to be taking their time going public these days, the pressure will continue to mount (even if it is alleviated by the likes of SecondMarket and SharesPost along the way).