Friday, August 3, 2012

Reasons for the LinkedIn IPO

by Vince Rogers
LinkedIn is the most powerful professional networking site on the internet. The currently has more than 150 million registered users worldwide. The LinkedIn brand name has become as synonymous with professional networking as Google has become with searching the internet.
LinkedIn filed for an initial public offering in January 2011. They traded their first shares on May 19, 2011, under the NYSE symbol "LNKD“. So why would a privately owned company that is experiencing astronomical growth and making tons of money for it’s owners want to “go public” and share the wealth with everybody else?
People start a business for many reasons. One of those reasons is that an entrepreneur has a great idea and they want to see their vision come alive and grow. At a certain point, the vision for the company grows to the point where expansion requires more money than the company can finance through loans, venture capital or profits.
When a company reaches that point they may decide to have an “IPO” or Initial Public Offering of shares of stock. “Going Public” as it is also commonly referred to, allows a greater number of large and small investors to invest in the company in return for a share of ownership. This enables the company to raise a lot of money for expanding the company without borrowing money that they might otherwise have to pay back.
 Although this sharing of ownership interest decreases the original owner’s stake in the company by a certain percentage, the increased financial investment in the company will multiply the value of the company many times over. So in general, a company is able to raise a lot of money to expand the company, while giving up some control of the business. Specifically, in the case of LinkedIn there were other advantages to “going public” that should create long term benefits for the company.
LinkedIn’s ability to successfully complete an IPO in a bad economy showed a sign of strength that created an enormous media buzz. This positive attention resulted in the company gaining wider recognition and an increase in customers, revenue and profits. Also, LinkedIn’s ability to have an IPO first allowed them to beat perceived competitors such as FaceBook, Twitter and direct competitors such as Viadeo to the punch. This positioned them as a leading brand amongst similar companies, a stronger company than their competitors and signaled a perceived vote of confidence from “Wall Street”
When your great idea becomes the next LinkedIn, these are the types of strategic and competitive factors that you should also consider before deciding to have your successful IPO.
This article is a companion to the  “Business Success” Video Series presented by Vince Rogers for
Learn about the Keys to business Success with help from the Principal Change Agent at Vince Rogers & Associates 

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