dürften Verkäufe nackter Shortseller gewesen sein, die darauf hoffen, dass spekulative Investoren aus Internet Capital aussteigen, weil im folgenden Interview der CEO darauf hinweist, dass man Gewinne mache und das organische Wachstum aus dem Cash Flow finanziere könne. Damit ist ein schneller IPO wenig wahrscheinlich. Zwei Dinge haben die nackten Shortseller übersehen: Erstens wird im Interview deutlich, welch exzellente Firma Metastorm mit annäherend 100 Millionen Umsatz ist und zweitens übersehen sie, dass bei Internet Capital fast ausschließlich sehr langfristige Anleger engagniert - nämlich zu 80% Instiutionals wie Fidelity oder Barclays.
Company Biding Time Before Re-Trying IPO
Amy Reeves
On Monday August 17, 2009, 5:57 pm EDT
Buzz up! 0 Print.Companies:Internet Capital Group Inc.
After a rough patch, tech companies are beginning to think IPO again. Last quarter, half a dozen tech firms debuted, after two quarters of no tech IPOs. There have been five tech IPOs in August.
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{"s" : "icge","k" : "c10,l10,p20,t10","o" : "","j" : ""} But the number of tech companies doing initial public offerings has yet to match the number that withdrew IPOs in the wake of last year's financial meltdown.
Business software maker Metastorm is one example. In May 2008, the 12-year-old company filed to list on the Nasdaq. Then the banks crashed, and by November it decided the market was too tough to go on.
Today, Metastorm CEO Robert Farrell says the company is doing just fine outside of Wall Street. Metastorm's story illustrates why a smaller tech firm -- its sales are less than $100 million a year -- might still find today's stock market more trouble than it's worth.
IBD: When you filed to go public, the IPO market was already declining. Why did the market look good for you at that point?
Farrell: Any S-1 process is very involved. We actually commenced our activities around the fourth quarter of 2007. The first steps are getting your investors on board and looking at the things you need to do in order to go public, and then getting the bankers set up. We really got going in earnest during Q1 of 2008.
When we made the filing, we said, "You know, the market right now is questionable. We may not want to keep this out there if what looks to be a trend continues." And that's what happened. But not being able to see through a crystal ball, had we not filed and the market improved, we would not have been able to take advantage of it.
We actually kept it out there until November, and we pulled it for the simple reason of there not being any market, and not desiring to continue to incur the expense and do the reporting to keep it current.
IBD: Some commentators are worried about the regulatory burden of going public. How big a deal was that for you?
Farrell: It's a big deal because, you know, if you're a $100 million company it costs you $2 million to $3 million in compliance, and if you're a $500 million company it costs you $2 million to $3 million in compliance. The impact on an EPS basis is much more significant on a smaller company.
That being said, I do believe in the innovation that an IPO offers a company. You get that access to capital and are able to do things you would not otherwise have been able to do. It puts you in a position to expand and grow your business and get to those higher levels. The cost of compliance is just something you have to carry along the way.
Personally, I think the level of compliance that's required is pretty heavy for some small companies. My guess is that over time, there'll be some cleanup in that regard and the pendulum will swing back the other way.
We looked at the AIM (London's Alternative Investment Market) as an alternative. We decided that that wasn't going to be right for us.
We have run the company like a public company for some time. In fact, some of our investors require us to actually participate in their Sarbanes-Oxley compliance because they're publicly traded asset-management companies, and our results are getting plugged into some of their filings. If you start your processes with the perspective that good processes will yield compliance vs. doing processes simply for compliance's sake, it's not so bad.
IBD: How have you been financed?
Farrell: Metastorm historically had venture capital investors. Over time, we graduated into more mezzanine or private-equity type players. That's where we are today.
We're very lucky in that we have investors with long-term views. Nobody is in a position where they have to get out. I'm not sitting here with guys who are right up against the end of their funds. (Our investor) Internet Capital Group (NasdaqGM:ICGE - News), for example, is publicly traded, so they can stay in this for as long as it makes sense.
We don't need operating capital. We're self-sufficient from a cash perspective -- the business is profitable and cash-generative. So our access to capital is more for purposes of doing acquisitions. Our investors are very supportive of that and are willing to provide us capital to do that. As well, there's no shortage of outsiders who try to position themselves to participate in any future rounds that we might do to support our acquisitions. The terms have improved.
The beauty of an IPO is you do that in one fell swoop. Had we been able to (launch our IPO), we probably would have taken a hammering like everybody else. But we would have had the capital.
IBD: So how much more difficult is it to get capital after the banking crisis?
Farrell: It didn't affect us, because we didn't need operating capital. During those couple of quarters -- the end of '08 and the beginning of this year -- we didn't access the capital markets but we kept our relationships strong.
What's interesting now is we're seeing not only private-equity type guys trying to get to our table, but the debt providers have surfaced in a big way. And the terms are not too crazy.
They're looking at a company like ours -- a software company -- and we have a very sticky and predictable maintenance stream.
So right now I think access to capital and access to debt has improved immensely. We feel that if we had to get access to money, we could.
IBD: In the last few months there has been a pickup in IPOs, especially tech IPOs. Has that got you interested again in doing an IPO?
Farrell: Of course, if you talk to bankers, it's a huge trend because it's what, 12 IPOs? I guess relative to zero, that's a lot.
I don't think there's consistency in the market yet that would suggest to us we'd want to get back out there. I see some unique companies, and some unique offerings out there getting priced.
I want to make sure that when we go, we get access to the kinds of investors we want to get access to. The kinds of guys that represent the right mind-set for our kind of company, investors that are going to take the time to understand our revenue flow and not hammer us completely on a quarterly basis if we've got any kinds of peaks and valleys that are a result of good business.
Right now the jury is still out (on doing an IPO). We're not going to jump back in at the current time. We continue to evaluate it, and when the market seems right, we will investigate doing it again. |
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