As a follow up to my earlier blog post, Are private companies worth more than public companies?, The New York Times Dealbook provides a worthwhile visualization and commentary on the growing valuation of some of today’s private high technology stocks vs. the public companies at the cusp of the 2000 meltdown. As cited in the article, Investing Like It’s 1999, five private companies today are worth the same $71 billion as 24 public companies in 1999.
As a young investment banker, I was taught early on in my career that private companies are worth less than similarly sized, similarly profitable and similarly growing public companies. This was largely due to the lack of liquidity associated with private companies. Now, one of my bedrock beliefs is being challenged.
Last weekend, I finished reading Rod McQueen’s “BlackBerry: The Inside Story of Research in Motion” and thoroughly enjoyed it. It got me thinking about one area devoted relatively little space in the book – the entrepreneur’s decision to go public.