Why Are They Not Going Public?

Why Are They Not Going Public? Hi Avid investor, Remember when I highlighted the shrinking number of public companies last Monday? Funnily enough, last week's news cycle actually included talk about two large companies going public! The first company is Slack, a popular service used in startup and small business land. I describe it as a modern-day AOL Instant Messenger, but for business. The second company is our beloved Personal Capital. Whereas Slack's IPO has been reported by The Wall Street Journal and confirmed by the company, Personal Capital's IPO is sheer speculation (the supporting evidence is strong). Both Slack and Personal Capital have millions of users and together employ thousands of people. If this were 15, 20 years ago, it is likely both companies would already have gone public. So the question remains: Why are companies delaying their IPOs? - They don't need the cash. A profitable and successful company doesn't need money to fund operations. If the company is not profitable, it has an alternative source of cash funding it (i.e., private markets). - There is no upside for shareholders. Private investors place a value on a company. If that company goes public, that given value will be priced into the stock price. If the value is absurd, then there is limited growth in the share price from the time the company goes public. Snapchat is a great example of this. - They have alternative exit plans. Many companies go the route of "being built to be bought." - It's expensive. Underwriting isn't cheap. Hiring underwriters from the time the company decides to go public and paying them indefinitely while public... is a significant expense. - Regulation, Regulation, Regulation. Once a company is public it must adhere to the rules put forth and enforced by the Securities and Exchange Committee. The SEC's goal is to level the playing field and ensure that companies are 100% transparent and honest when reporting their financials. Out of these reasons mentioned, I suspect regulation is the kicker. Kat published a great article this past week on what exactly the SEC's mission is and what the idea is behind so much regulation. Read [What Is the SEC? And How Does It Protect My Investments?]( Have a great week, everyone! Elizabeth -- Investor Junkie Helping Make Finance Easy [( --------------------------------------------------------------- Disclaimer: By reading this, you agree to all of the following: You understand this to be an expression of opinions and not professional advice. Investor Junkie makes no guarantee or other promise as to any results that may be obtained from using the information provided. You are solely responsible for the use of any content and hold Empowering Media, Inc. and all members and affiliates harmless in any event or claim. If you purchase anything through a link in this email, you should assume that we have an affiliate relationship with the company providing the product or service that you purchase, and that we will be paid in some way. We recommend that you do your own independent research before purchasing anything. Copyright © Empowering Media, Inc. | All Rights Reserved Our mailing address is: Empowering Media, Inc. 2417 Jericho Turnpike #112 Garden City Park, NY 11040-4710 United States ​ [Add us to your address book]( [Unsubscribe](