One Exit Gone

It's not that the IPO market is gone forever, but it is closed for business currently. This has caused problems for venture-backed firms needing liquidity, but also makes it harder for small business owners looking to sell. With the IPO market closed, sale prices will be lower. If you can wait for better times you will garner a better selling price, but it will be a longish wait.

If your business plan lists an IPO as near term exit strategy, you can forget it. Oh, the market will come back, just not any time soon. At least according to the folks polled by Inc. magazine. Of the Venture Capitalists polled, 79 percent said IPO activity won't pick up again until 2010!

According to C/Net News, not one IPO was launched during the second quarter 2008 in the US. As they noted in a piece dated July 1,

"The broader pullback in the economy is affecting corporate spending and is clearly impacting the M&A market," Jessica Canning, global research director for Dow Jones VentureSource, said in a statement. "Corporations might be out looking for venture-backed companies to acquire, but many are either doing so quietly or choosing to hold off on entering into negotiations."

Since March, for example, 10 companies have yanked their IPO registrations. Currently, 22 companies still are registered to launch an IPO, but are waiting for the markets to improve before going out, Canning said.

All this means you may want to sit tight until the market rebounds, but you may be waiting a few more years (not just months) for that to happen.