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  • Investing like it’s 1999

    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.

    Are Private Companies worth more than Public Companies? – Sometimes

    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.

    I’m sure you have read of the recent financing rounds done by several high profile private companies, including Facebook and Twitter.

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    Top 10 Reasons for Entrepreneurial Success

    i 46e21309d0d61bea4da9e8346f87be24 new york times logo 23(1) Top 10 Reasons for Entrepreneurial SuccessThe New York Times Small Business section is usually a worthwhile read.

    Today’s piece by Jay Goltz,entrepreneur and small business columnist, on what he views to be the Top 10 Reasons for Entrepreneurial Success is especially good and, I thought, worth sharing.

     

    “The (Hot) IPO Market” or “Do Profits Matter?”

     

    With the apparent resurgence in the IPO market, it seemed timely to revisit my last blog What to know before you IPO and ask, “what’s changed?”

    After doing a little digging, it seemed to me there are several points worth making, which haven’t really been front and centre in the popular press. Namely:

    1. Yes, the IPO market has recovered from the depressed levels of past years, but it’s still at low levels;
    2. The markets appear to be primarily focused on revenues and less so on earnings;
    3. High valuation levels being accorded IPOs is at least one of the driving factors of this resurgence and there is a growing gap between valuation of revenues and profits that should provide a cautionary note for investors.

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    What to know before you IPO

    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.

    Now, in 300 pages recounting the 25 year history of perhaps Canada’s most successful technology company, you may figure 20 pages is sufficient to devote to the issue of going public. For the record, Research In Motion (RIM) completed a private placement of $34 million to institutional investors in June 1996 (12 years after Mike Lazaridis had started the company) and then completed a full blown IPO in October 1997.

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