While many IPOs turn into hits — such as Google (NASDAQ:GOOG), Salesforce.com (NYSE:CRM) and LinkedIn (NYSE:LNKD) — success is far from guaranteed. Some companies, like Pets.com, have filed for bankruptcy within a year of an offering. In other cases, companies end up going back to private ownership. This actually was a huge trend from 2002 to 2007, which benefited private equity firms like the Blackstone Group (NYSE:BX) and KKR (NYSE:KKR).
And through the years, the IPO process has become much tougher. For example, there is an extensive set of regulations that require lots of disclosure, as well as strong information systems. The result: It can cost millions of dollars a year just to keep up with compliance requirements!
A public company also must find ways to develop interest in its stock. Again, not an easy task. Because of consolidation on Wall Street, fewer analysts provide coverage. In fact, it’s not at all uncommon for a public company to have no analyst coverage. Read