A record number of U.S. companies want to go public, National Venture Capital Association President Mark Heesen told the IBTimes in a recent interview. But the IPO market essentially shut down in mid-summer.
Groupon, the Chicago-based deals site that uses technology to distribute coupons, waited more than a quarter before its IPO, co-managed by Morgan Stanley, Goldman Sachs and Credit Suisse, took off. Since its pricing at $20, Groupon shares traded as high as $31.14. On Wednesday, they were around $23.10.
The underwriters gambled that the market would favor the issue after a couple of weeks of higher-than-expected earnings reports and apparent agreement in Europe over the financial crisis.
But market volatility continues. And what about deals for lesser-known companies like Zynga, Vocera Communications and M/A-COM Technology Solutions, itself a former listed company that was bought by Tyco International, that have been languishing for months?
Some are finally ready to roll. Security software developer Imperva, based in Redwood Shores, Calif., raised $90 million Tuesday in a deal co-managed by JPMorgan Chase and Deutsche Bank Securities.
Priced at $18, $4 above its suggested range, Imperva shares traded Wednesday at $24.28, or a 35 percent pop, even as the overall market declined more than three percent.
The company can promote its prowess in fighting hacker attacks against government and corporate networks as well as the pedigree of CEO Shimon Kramer, an alumnus of long-established Israel vendor CheckPoint Software Technologies.
Zynga, the San Francisco-based developer of games like FarmVille and Zynga Poker, has been sitting in registration since July, when it planned to raise $1 billion. Co-managers of its deal are Morgan Stanley and Goldman Sachs.
The game site this month said its nine-month revenue more than doubled to $829 million from as many as 6.7 million subscribers. The Securities and Exchange Commission hasn't completed its review yet. The SEC continually asked Groupon for more information, which caused that company to lower its money raising expectations.
Gaming stocks are often very volatile and a public Zynga would compete against the likes of Electronic Arts, Take-Two Interactive Software and Konami, and be valued more than all of them combined. Electronic Arts alone is valued now around $7.7 billion.
And how about Facebook, the Palo Alto, Calif.-based social networker with an estimated 800 million subscribers? It's been coy about its finances, although by law it will be required to disclose financial information next quarter because it has more than 500 shareholders.
Early in 2011, Facebook took in $500 million from Goldman Sachs and Russia's Digital Sky Technologies in a deal that valued the whole business at $50 billion. CEO Mark Zuckerberg has been wary about an IPO, although he has apparently not refrained from selling some Facebook shares from his personal account to pay for his $100 million gift to the schools of Newark, N.J. in 2010.
One strategy mooted by Wall Street insiders is that Facebook acquire Yahoo, another Goldman Sachs client, through a so-called reverse takeover. Yahoo, in Sunnyvale, Calif., is valued now around $19 billion.
A takeover of Yahoo might please outside investors like Daniel Loeb's Third Point Capital, but frustrate the announced intentions of China's Alibaba Group to acquire it for itself; Yahoo now owns about 40 percent of Alibaba.
For sure, a Facebook IPO would be as tempting as Yahoo's was back in 1996, Netscape Communications in 1995 and Google in 2004. None of those three had had a movie like The Social Network about it or as strong a customer base.
Google was valued at $27 billion in its IPO. This week, the Mountain View, Calif.-based search and media company is valued around $195 billion.
Of course, the private companies might well turn to some of the Big 10 technology companies, including Google, Yahoo and Oracle, sitting atop a cash pile exceeding $300 billion, according to IBTimes estimates.
In the last two months, security software developer Q1 Labs sold itself to IBM, Oracle snapped up unstructured data analysis software developer Endeca for as much as $900 million and Google acquired restaurant reviewer Zagat for $151 million.
This week, Zagat rival Yelp hired Goldman Sachs and Citigroup for an early 2012 IPO that might value it as high as $2 billion. Last year, Elevation Partners, the Menlo Park, Calif.-based investment firm owned by Roger McNamee and U2's Bono, bought a 20 percent stake for $100 million.
Elevation Partners also invested $270 million in Facebook last year, which it now values at $1.2 billion.
With those kinds of returns, Facebook might never want to schedule an IPO.