I am a big believer that the IPO can play a key role in the development of a company's life. Moreover, I have argued that many in our ecosystem have an unhealthy anxiety regarding the dangers and consequences of being public. Lastly, I have argued that the IPO window is wide open for great companies – something I still believe today. All of that said, I have been quite surprised by the recent trend in companies that file and then chose to delay. If you are going to file the S-1, it is imperative that you are prepared to follow through. Standing too long in the middle of the financial equivalent of the River Styx can have severe consequences.
Why is this a bad thing? The longer a company remains on file without pricing, the more questions arise about "why" the company may be struggling to move forward. Did they miss their numbers already? Are they having cold-feet? Are they not ready? Do investors not like the company? Have the bankers lost their belief in the company?
Employees may begin to wonder the same thing. As you are in a quiet period, it may be difficult for you to respond to concerns through the press. If you then take the added step and "pull" your IPO, you now risk being considered a "broken" deal and potentially a "broken" company. Potential acquirers will certainly see it that way. These problems can be especially acute in Silicon Valley, where competition for talent is intense. Lastly, to file and not price is to give up all the benefits of being private with none of the gains of being public. You have been exposed, but you have nothing to show for it.
There are many things that can cause delays in filed IPOs. The most common factor is unexpected questions from the SEC that cause iteration and re-filing. This is especially true of the SEC questions that require the auditors to revisit their original assumptions. Shaky investor sentiment as a result of a weak broader stock market can cause both investors and bankers to have "cold feet." There may also be concerns with valuation and dilution. If your company looks like it is going to price at a 30% discount to what your bankers conveyed on filing date, you may not want to suffer unexpected dilution. Lastly, there may simply not be enough demand for your IPO – which is an amazingly tough position for your company.
上表所示为最近上市的一些公司，从提交申请到确定发行价之间的期限，以及社交网络游戏Zynga公司、团购网站Groupon和旅游搜索引擎Kayak公司提交上市申请后迄今已经流逝的时间。表中四家已上市公司“申请-定价期间”平均略超100天。标杆资本（Benchmark Capital）有幸投资了其中两家（房地产搜索服务Zillow公司和云服务供应商ServiceSource），它们在“申请-定价期间”这项指标上的表现最好，分别是93和94天。Groupon提交上市申请后经过的日子已经超过了这一水平，不过最近有新闻称，他们可能已“回到”正常轨道”，预计将在十月底确定发行价（那样的话相当于提交申请后150天）。根据雅虎财经(Yahoo Finance)，Zynga上市被列为“已推迟”，目前已是提交申请后75天。而在旅游搜索领域领先的Kayak公司已经提交上市申请301天了——对任何公司来说这都是危险的信号。
The table on the left shows the number of days from pricing to filing for some recent IPOs, as well as the days on file for Zynga, Groupon, and Kayak. These four companies had an average pricing-filing span of just over 100 days. Two of the IPOs in which Benchmark was lucky enough to be an investor (Zillow and ServiceSource) had particularly good showing on this "pricing-to-filing" metric with 93 and 94 days respectively. Groupon is starting to move outside this ban, but recent news suggests they may be back "on track" with a target date of late October (this would equate to 150 days on file). Zynga's IPO is listed as "delayed" on Yahoo Finance while standing at 75 days. Kayak, a leader in the travel search space, had been on file for 301 days – a precarious position for any company.
While many of these potential causes of delay appear external and "out of your control," there are in fact many things you can do to minimize the number of days between filing and pricing.
1. Don't start the process until you are ready. This certainly includes knowing your business is performing well, but also includes having the auditors ready, having your financials in order, having a strong CFO and general counsel, having your BOD ready to go, and generally being prepared for what is about to happen. Talk to other CEOs who have kept the process on time, and find out how they prepared.
2. Pick a banker who understands that you are sensitive to filing-pricing timing. Some bankers will tell you this metric is not critical. You own the problem if you are stuck in a filed but un-priced company. You should tell the service provider what is important to you, not the other way around. Great investment bankers have a strong understanding of SEC process, SEC rules, and may even have an ex-SEC representative on staff. These things matter, and you should be able to tell whether or not they matter to your banker. Also, find out before you file if your banker believes in you and your business. If you are defending your business to your banker "after" filing the S-1, you had a clear sequencing problem.