Re-IPO-ing in the United States

When most companies consider an IPO, they tend to focus on the benefits associated with having a liquid trading market for their common or ordinary shares. Having a class of equity securities that is listed on a securities exchange provides an acquisition currency. It also enables a company to recruit and retain talented employees whom it can reward through stock-based compensation. 

However, going public on a stock market that lacks trading depth and liquidity may be a costly mistake. A company may have become subject to periodic reporting requirements and corporate governance requirements without benefiting from having a liquid stock. Its ability to finance and its financing costs may not have improved. In fact, it may make financing at an appropriate valuation considerably more difficult. 

While "being public" may have lost its luster and going dark may seem compelling, this is exactly the time to consider a re-IPO - doing it all over again on a more liquid, deeper stock market. In a future blog, I will discuss the re-IPO process in detail.