IPOs a Good Sign


How about some good financial news? Really! I’m not kidding.

No, it doesn’t mean this current economic downturn is over — but it is a step in the right direction. Last week, two initial public offerings for technology-based companies got off to a positive start. The companies (OpenTable, an online restaurant reservation service; and SolarWinds, which makes network management software) could be harbingers of good things to come.

Venture capitalists have seen little, if any, recent return on their investments. Only six venture-supported start-up companies went public last year. That was the lowest since 1977 and a dramatic freefall from the 86 IPOs in 2007 and the 100-plus prior to the bursting of the technology bubble.

Experts say the changed financial landscape will prevent a return to the IPO glory days of the past decade. Why? New banking and accounting rules make it more difficult to go public; big banks bought many of the smaller banks that were active in taking start-ups public; and with additional pressures, fewer banks and investors are spending time researching the smaller companies.

But those experts would like to eventually return to an average of 50 IPOs a year. And this could be a start in the right direction.

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