IPO alternatives
|
Type
|
IPO Alternative
|
Pro
|
Cons
|
|
Debt
|
Commercial
|
No sharing of profits
|
Dependent on sufficient net
|
|
bank/lender
|
worth, income, or cash flow
|
||
|
Debt
|
Asset-based
|
No sharing of
|
Dependent on sufficient as-
|
|
lending
|
profits
|
sets or cash flow – has higher
|
|
|
borrowing costs
|
|
Other
|
R&D/Investment
|
Can result in favorably
|
|
partnership
|
priced financing; could
|
|
|
or joint venture
|
result in synergy and
|
|
|
industry clout
|
Dependent on a viable tech- nology or other intangibles; could result in a demanding partner
|
Debt/
|
Institutional
|
Can be simple – few
|
More sophisticated investors–
|
|
Equity
|
parties involved
|
may negotiate a lower price
|
|
|
Debt/
|
Leverage
|
An exit strategy
|
Company must have ad-
|
|
Equity
|
ESOPs
|
or financing device with
|
equate security for lender (as-
|
|
certain tax preferences
|
sets, income, or cash flow)
|
|
Other
|
Selling the
|
Can permit a complete
|
|
company
|
and certain exit by
|
|
|
existing shareholders
|
May result in lower pricing than an IPO, loss of future upside tax considerations
|
Convertible Venture capital
|
Can be simpler; added
|
|
Debt/Equity
|
experience and reputa-
|
|
tion is brought to the
|
|
|
company; focus is
|
|
|
more on future potential
|
|
|
than on current security
|
More sophisticated investor– may result in lower pricing for the company, plus there is an expected 5- to 7-year exit
For more information on these alternatives, please contact your local PricewaterhouseCoopers’ technology professional at 1-877-PwC-TICE.
|
PricewaterhouseCoopers LLP Roadmap for an IPO
|
11
|
