When will Facebook go public? Though 2012 seems far more likely than 2011, Facebook-watchers of all types seem desperate for the company to take the plunge into public capital markets.
Though the social media company could probably benefit from another year of flexibility, there are some pretty compelling reasons or 2011 IPO, however unlikely that may be.
Since “because we want it to” doesn’t seem to be a good enough reason for a Facebook IPO, here are six to check out … the first of which, of course, is “because we want it to”:
1. Everybody wants Facebook to go public: social media spectators, the media and analysts would have a blast if Facebook were to go public. There would be no shortage of report, article and conversation fodder. Investors, one would suspect, are eager for some liquidity, and the fact that employees have pushed for early exits of some of their options indicates that they are ready to recoup some of the salary they have forgone in favour of equity. The only people who don’t seem to want Facebook to go public are on the board (and some strategic investors), who reportedly want to see an IPO in 2012. Meanwhile, everyone else is eager, simply because it’s so familiar: we’re using Facebook for everything.
2. Facebook has had (non-traditional) liquidity events already: this isn’t in the traditional sense, but Facebook shares have been involved in transactions that reach far beyond traditional private equity and venture capital investments. The trading in private secondary markets, such as SharesPost is indicative of this, as is the fact that Goldman Sachs has committed to raising $1.5 billion in capital from its high-net-worth investors.
3. Sometimes, you can’t fight adulthood: doubtless, Facebook enjoys a considerable amount of flexibility. Mark Zuckerberg can run the company as he pleases, given the structure of the board and company equity. He can take risks, execute is vision and, frankly, do what he’s obviously done pretty well so far. Depending on the nature of the IPO, all this could change when public investors are involved. But, that’s part of growing up. Zuckerberg is getting older, and so is Facebook. It’s time to bite the bullet.
5. A rising tide is likely: once Facebook clears the way, it’s likely others will follow. LinkedIn and Twitter, for example, are sure to watch a Facebook IPO closely. Even if they don’t pull the IPO trigger (thinking of Twitter particularly), it seems evident that attitudes toward other liquidity events in this space will evolve, making big-ticket M&A more probable (for example).
6. Cash in ahead of risk: remember when MySpace’s position seemed unassailable? Yep, it’s a sentiment now worthy of a chuckle. Let’s not forget, though, that MySpace cashed in to the tune of $500 million when News Corp bought it … shortly before the expression “MySpace refugee” caught on. Granted, Facebook has better business, but I think we can all agree that nobody is immune to competition.