IPO Market Still Quiet. Yeah, Too Quiet

from the the-cops-totally-busted-the-party dept

In the ongoing debate about whether or not there is a bubble in technology investment, the optimists make the argument that the IPO market is nothing like it was in 1999. This would seem to be a good sign that Wall St. doesn't have the same appetite for speculation that it used to have. Though this is part of it, there may be more to the story. There's evidence that speculation hasn't actually gone away, but rather it has moved to darker corners of the financial markets. Trading volume in penny stocks is at all time highs, much larger than it was back in 2000. Perhaps the reason that Wall St. hasn't embraced the IPO market isn't a lack of risk taking, but structural flaws hindering this market. Venture capitalists are complaining that government regulations, such as Sarbanes-Oxley, are making it too costly to go public. Though one would expect VCs to blame the government and regulations for their woes (as opposed to poor investments), they may have a point. In the last year, several US companies have actually gone public in London, where they can avoid US regulations. Instead of being positive about the weak IPO market, perhaps it's a bad sign, as investors must seek out riskier investments, liquidity is pushed overseas, and VCs are saddled with lower returns.


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  1.  
    identicon
    Avner Ronen, Apr 28th, 2006 @ 10:22am

    but the M&A market is very noisy

    maybe not too many IPOs, but many M&A transactions giving high multiples to the privates (e.g. eBay/Skype, EA/Jamdat, Fox/MySpace).

    plus the VCs are giving very generous valuations these days and have lots of cash to pour into these companies (e.g. Motricity, HandsOn)

     

    reply to this | link to this | view in thread ]

  2.  
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    Nobby, Apr 28th, 2006 @ 2:20pm

    Liquidity

    I just sneezed really hard and I now have liquidity in ther seat of my pants.

     

    reply to this | link to this | view in thread ]

  3.  
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    Bruce Boston, Apr 29th, 2006 @ 7:33pm

    SEC and Small Businesses

    I have a few Podcasts of the last SEC and Small business committee meeting up on my blog.. They talked about London's AIM, IPOs in the US and SOX...among other things. http://quid.typepad.com/quidstreetnet/2006/04/podcasting_the_.html -bruce QuidStreet. net

     

    reply to this | link to this | view in thread ]


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