Frank Quattrone has been overseeing and advising tech companies on IPOs for more than 30 years, first at Morgan Stanley, and more recently at his firm Qatalyst.
So what advice does he give for those companies who are ready to make the plunge?
- Be ready to BE public. While he thinks a lot of companies are waiting too long, he also warns that being public means you must have your books totally in order, and must be able to deliver solid results “out of the box” for the first few quarters. If you have to restate or you miss a quarter early on, your early big investors might sell off and your reputation will be tarnished.
- Don’t insist on using Morgan Stanley or Goldman Sachs to underwrite your IPO. They’re huge, busy, and in high demand, and they may not give you the kind of attention you could get from a smaller firm.
- Don’t be pressured into raising too much. Underwriters tend to want to push companies to raise as much as possible as it means more money for them. Quattrone reminds companies that it’s their decision — and a smaller float means more control for the entrepreneur.
- Don’t let underwriters allocate your IPO to THEIR best customers. You want the big early investors in your company to be around for the long haul and generally aligned with your interests.
- Don’t use auction pricing. It’s probably going to make your IPO price too high, setting you up for a plunge later on.
- Do respect your public investors and treat them as partners and important constituents.
The basic takeaway: it’s your company. Retain as much control as you can.
Quattrone spoke at an event sponsored by online financial advisors Wealthfront last night.
Update: Here’s a video of the event. His suggestions for going public come around 25:00.
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