While there's been a lot of talk about Facebook going public this year, this week the rumor mill suggests LinkedIn might be the first social networking company to file an IPO. Here's a look at why this might be a crucial move for the business network.
But first, the details-- of which there aren't many: We've heard the company is aiming to go public within the first three months of this year. Investment bankers of Bank of America Merill Lynch, JPMorgan Chase and Morgan Stanley have reportedly been hired for advisement, and the size of the offering is expected to be small relative to the company's value.
Someone, Anyone, Please Go Public!
Is it a good move? Sure. Tapping the public markets would likely yield heightened investor interest in social media, as well as indicate what other networking companies planning to go public (Facebook) can expect. Further, let's say Facebook somehow manages to go public first. In the wake of that behemoth, who's going to pay attention to smaller companies following suit?
A company that goes public now would be able to take advantage if all the hype and investor interest built around this sector without competing against Facebook for attention.
"You don't have other companies in the market to benchmark against. You can trade at multiples that are far off from the reality," pointed out Josef Schuster of IPOX Schuster, an IPO investment firm in Chicago. "Someone is going to take this opportunity. "If it's not Facebook, it's going to be LinkedIn, Twitter or someone else."
On the other hand: "Investors are looking for smaller, high-growth Internet companies," claimed TCW Group media analyst Anthony Valencia. "There have been a dearth of those going public over the last couple of years. That trend could continue this year. So that could be a sweet spot for LinkedIn to do an IPO."
Setting a Business Example
As for the effects on the business community, some experts argue that a heightened profit motive could result in social tools that are better suited to the the customers with the biggest bucks. Enterprise folk, this means you.
This would surely subdue some of the concerns/complaints coming from the business community, such as the oft-heard stink about the level of noise the social media landscape projects.
Unfortunately, you'll have to hold tight. LinkedIn is keeping a zipped lip: “We don’t comment on speculation," said a LinkedIn spokesperson. "An IPO is one of many tactics that we could choose to pursue. We are focused on building our business and doing what is in the best long-term interest of LinkedIn members and shareholders.”