Dual Path, or when is an IPO not an IPO?
April 28th, 2008 by Benjamin KuoAt a recent Orange County Venture Group event, focused on the experience of Entropic on the IPO market, one of the panelists, investment banker Ernie Ruehl of Credit Suisse, made the comment that when you file a registration statement, “you’re putting a ‘for-sale’ sign on the company.” In fact–in my own discussions with CFOs, investment bankers, auditing firms, and others recently, I’ve heard the same comment–that an IPO filing today is a signal to the market for buyers–something people have told me is referred to as the “dual path.”
To be sure, any company filing an IPO is likely to try to get to the market. But, increasingly–due to Sarbanes-Oxley, and the current market climate–companies are more often than not also hoping that a strategic buyer will step up to the plate and purchase the firm, avoiding the hassle of having to deal with quarterly filings, regulatory scrutiny, analysts, and the hassles of a roadshow. The service providers I’ve talked to tell me that simply, if you’re able to file for an IPO, you can show companies that your books are clean–are disclosing full financials–and essentially are ripe for an acquisition.
