It’s shaping up to be a bleak year for IPOs. Last Thursday, BG Medicine pulled its initial public offering, citing market conditions. The week before that, Elixir Pharmaceuticals also put its IPO plans on ice. But the idea of IPOs was alive and well last Thursday night, when I had the pleasure of moderating a great discussion—Are You Ready for IPO?—before some 300 guests at MIT’s Kresge auditorium and who knows how many others who watched on a special TV broadcast at 45 locations worldwide.
The panel was put on by the MIT Enterprise Forum. And I had four fantastic, eloquent, insightful, and humorous guests: Jonathan Bush, Jr., chairman and CEO of Athenahealth; Gail Goodman, president and CEO of Constant Contact; Jonathan “Jono” Goldstein, managing director of TA Associates; and Bruce Evans, managing partner of Summit Partners. Both Athenahealth and Constant Contact are roughly 10 years old and successfully went public last fall.
We dissected the current climate for IPOs (bleak no matter how you slice it), the spectrum of investors—from angels, to early and mid-stage VCs, to growth private equity folks like Goldstein and Evans (who typically invest in established, profitable companies looking to move to the next level), to buyout artists who use as much debt as possible to purchase companies that typically are not growing very fast. Along the way, we heard some riveting tales from Bush and Goodman about what it was actually like to go on the IPO road show, the wheeling and dealing with investment bankers, the private jets and black sedans, lock-up periods, and a lot more. Somewhere near the end of our discussion, Bush whipped out some notes he had taken and delighted the crowd dispensing some key advice to entrepreneurs who might one day seek their own IPO.
Now, to put his comments in perspective, it’s important to know that Bush is anything but demure. Like when I said: “People often ask you how you are related to the President, and I’m told that’s not the right question: How is the President related to you?
And he said: “Yeah, you’re goddamn right. The President is my cousin, and he lobbied hard for the role and succeeded in the end. We took him. Sometimes we think about putting him back.”
I figured pearls of wisdom from such a character were too good to pass up, so I snatched his notes and convinced the MIT Enterprise Forum’s Greg Wymer to let me listen to a private video feed of the broadcast so I could get things exactly right. The result is a slight hodgepodge and condensation of what he wrote and what he said at various times during the event.
It all started when we were talking about investment bankers—and that seems to have set him off:
“The investment bankers are really charming and incredibly good negotiators…they’re very savvy, very svelte kind of smooth talkers, and you can see a lot of use for that after you’ve been, you know, kind of filleted by them. I wish that somebody, either our lawyer, or…somebody had given me a list. Can I give you the list?”
What moderator would say no?
1) On lockup (the period after a company goes public when key insiders can’t sell their stock). “There’s a lockup and they say, ‘It’s always got to be 180 days. It’s just what’s done.’ Well it absolutely does not have to be 180 days. It
