Contact: Brenon Daly
IPOs are not what they used to be. The companies looking to go public recently have had to scale back their expectations, cutting both the amount of money they hope to raise and what they expect to be worth as they start life as a public company. The implications of these slimmed-down debuts extend far beyond the IPO candidates themselves. Smaller offerings trim the fees available for underwriters, which rely on these hotly contested mandates to offset the cost of supporting research and trading for public companies. And perhaps more alarmingly, the lower IPO valuations make it difficult for venture capitalists and other investors to realize decent returns in what was once a fairly sure path to outsized performance.
At least that’s the situation for most IPO candidates. (For instance, we’re not knocking either Meru Networks, which went public last week, or Nexsan, which is slated to come out this week, but both are valued by the market at less than $300m.) However, there are exceptions. Just as a few companies were able to make it public in 2009, while most would-be debutants just had to ride out the recession as private businesses, there will be rich valuations doled out to IPO candidates, even during this time of discounts.
From our perspective, the next player that’s likely to enjoy a warm welcome on Wall Street is QlikTech. (At $100m, the offering itself is one of the largest enterprise software IPOs in some time.) In fact, if we pencil out the initial valuation for this fast-growing, profitable analytics provider, we come up with a number that’s in the neighborhood of $1bn. QlikTech may not hit that magical mark on its debut, but we suspect that it won’t fall too far below it. Look for our full report on the company and the offering, including our projected financials and valuation for QlikTech, in tonight’s Daily 451 sendout.