Wednesday, June 30, 2010

IPO Process In The U.S.

The IPO process in the U.S. apparently needs an upgrade.

This Wall Street Journal article points out:

- Big investment banks don't like to be bothered with firms with less than $ 250 million in market value.
- There are 4,000 to 5,000 small companies in Silicon Valley that would like to raise capital (in the $ 10 million to $ 30 million range).

The article adds that "most banks can't be bothered with such piddly deals." 

 The above is just another example of how processes of capital formation and allocation is less than optimal. We need more capital to efficiently get in the hands of those with the best ideas (what the US historically excelled at) to encourage innovation and job creation.

More from the article:

If great oaks are to grow from acorns, the seedlings could surely use a little help.

Here are some previous posts with additional examples of capital development having evolved into something less than optimal over time:

Capital Productivity

Venture Capital

Capital Misallocation

Buffett & Bogle: Overcoming Short-termism


Addressing these weaknesses can't happen soon enough.

Adam

This site does not provide investing recommendations as that comes down to individual circumstances. Instead, it is for generalized informational, educational, and entertainment purposes. Visitors should always do their own research and consult, as needed, with a financial adviser that's familiar with the individual circumstances before making any investment decisions. Bottom line: The opinions found here should never be considered specific individualized investment advice and never a recommendation to buy or sell anything.
 
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