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A question for the resident experts here.
Do investors, as a rule of thumb, prefer the IPO option as an exit strategy vs., say, a merger or buyout, etc.? I've been looking into the Frankfurt Stock Exchange as an option for a possible IPO to include in my PPM as an exit strategy. The requirements are a lot easier than American exchanges, and it's far cheaper to get listed. Additionally, Sarbanes-Oxley does not apply which is a large cost for public companies.
Thoughts?
Thanks!
Shawn Garza
Shawn,
Private equity investors will generally prefer an exit that offers a reasonable return on their investment in the least amount of time.
Your idea of pursuing an IPO on the Deutsche Boerse in Frankfurt (I’m assuming you’re talking about the “Open Market” “Entry Standard”) is probably not the most qualified exit scenario for investors in a U.S. entity. Also please consider that you’re likely comparing listing requirements for the NYSE with the German equivalent of the U.S. OTC/pink sheets marketplace rather than those for the German Xetra Dax. They’re just not the same!
What is it that you’re trying to do?
Please feel free to send me a private message or contact me via JacksonSteiner.com if you’re interested in discussing your project in greater detail.
I hope this helps.
Karl Mohr
Shawn,
Karl made an important point, i.e., what are your goals? Different goals dictate different strategies and tactics to achieve them. If you don’t know in what direction you are heading, it doesn’t matter how fast you are going.
Ed Baloga, CPA / MBA
Principal CFO
Baloga Associates
ebaloga@baloga-associates.com
www.twitter.com/edbaloga
Most investors will tell you that the IPO is their preferred exit - however, given a poor IPO market like we have now - M&A is a more viable option. Instead of stating how and where you would like to IPO - just state that you are open to the best method of the time.
Second, there are better exchanges to list on outside the US - there are several exchanges in Canada and the AIM in London that would be much better to list with (more liquidity, more visibility). But, even as a company listed on a foreign exchange - you sill would have to comply with SOX.
My goal is to give the maximum return to investors in the shortest amount of time. Based on everything I've read, IPOs are the way to go.
Karl: The requirements for listing on NYSE vs. German Xetra Dax, how different are they? Does the Boerse still have requirements that are attractive? I'm not a fan of the Pink Sheets or the OTC BB because finding market makers seems to be a major problem. Again, from what I've read, the German "Open Market" or "Entry Standard" are more highly traded than their counterparts in the USA. Perhaps, I'm mistaken. It has happened before!
Thanks again,
Shawn Garza
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