

Yelp Helps Kill the IPO Market - cwan
http://www.pehub.com/62156/yelp-helps-kill-ipo-market/

======
wheels
Hmm, this sounds as if it's markets routing around (†) Sarbanes Oxley. Some of
the recent PE deals that have been going through are larger than dot-com era
IPOs.

† <http://news.ycombinator.com/item?id=414520>

------
danteembermage
That Grant-Thornton piece linked to in the article has an interesting
perspective. For example:

"The market impact [to the advent of online brokerage firms], unforeseen as it
may have been, was devastating. Stock spreads narrowed, and the economics to
broker-dealers continued to erode"

In summary: Broker dealers were priced out and therefore no longer provide
quality research and liquidity support for small stocks which include IPOs.
Therefore, no IPOs.

The remedy? Bring back quotes in 1/8s so trading frictions can increase again
and therefore, somehow, IPOs come back. Can we give their argument a fair
shake somehow? It's not making sense to me.

------
GabrielBen
Killing an IPO market its more a healthy sign than a bad one.

IPOs were always a way for the finantial institutions to take profit from
naive market investors. Historically IPOS have very bad results in average,
and in the case they do get good results, they dont get to the average one-guy
online investor but to institutions.

Finantial institutions involved in the IPO proceedings (getting your company
fit to be a public company) can get up to 10% of your company : they dont
invest money at all, they only help your accounting be public and legalities.

Of course, IPOs are widely advertised because the more people pay, the more
money these institutions win. Of course, the institutions that used to do
these are the ones that are in a terrible shape from the economic crisis.

Benjamins Grahams "Intelligent investor" says IPOS are "for suckers" :). The
book that was written many decades ago even mentions these same financial
institutions used to consider IPOs an unethical business because too many
unskilled investors hoped too much of such operations.

------
sgman
How does this help the VCs liquidate?; i.e. if the IPO market got killed in
favor of such deals, wouldn't that discourage venture capitalists from making
investments?

~~~
ghshephard
Why would a VC care if later rounds of funding came from an IPO or through
Private Financing, as long as they were able to liquidate.

What I think is cute, is that with Second Market, Sharespost, and others,
we're seeing "collectives" or "partnerships" raise money from the private
investors, and then purchase private stock.

For all intents and purposes, these private companies will now have thousands
(or tens of thousands) of investors, as represented by a few very large
partnerships.

Unlike Google, these private companies won't exceed the 500 investor limit,
won't have to go public, will allow employees to liquidate - and the only
organization that is hurt will be the SOX auditors who don't get a new public
company to audit.

------
ojbyrne
There's a link right on the same page to "Glasshouse files for IPO:"
<http://bit.ly/aR2G8R>

~~~
asmosoinio
[http://www.pehub.com/62168/glasshouse-files-
for-75-million-i...](http://www.pehub.com/62168/glasshouse-files-
for-75-million-
ipo/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed:+pehub/news/all+\(PEHub+News\))

------
pclark
How do the PE companies get their return without an IPO?

------
mrtron
Small note:

Secondary investors such as Millennium Technology Ventures have plaid a role

Should be 'played a role'

~~~
ohashi
'Venture capitalists, though their own success in the run-up to the dotcom
boom obviated the need for companies to turn to the public market for massive
financing rounds.' through?

it doesn't look like the person reason their own article twice or did any sort
of editing :(

~~~
robotblake
"it doesn't look like the person reason their own article twice or did any
sort of editing :(" reason?

I agree with you, the article does seems to show a lack of proofreading.

