The Grand Plan Was...
EPiServer’s Board of Directors decided it would be good to go public for a number of reasons:
- to prove their level of maturity
- to strengthen the company’s profile in the market
- to get a cash influx
- to become more attractive to partners and customers
- and, perhaps, even dabble in the M&A activity.
Broadening their Nordic horizons and conquering the North American market wasn't off their minds either, we would imagine.
When EPiServer initially announced their plans to go public, they were planning to:
- expand the company and the shareholder base
- diversify company ownership through an issue of new shares
- get a listing on Stockholm's NASDAQ OMX Stock Exchange.
But What Happened Was...
Upon the conclusion of the book-building period, all leading up to the first day of trading on June 30, 2010, it was a bright morning in Stockholm. No, wait, Stockholm is not known for bright, sunny days. It was (the beginning of) a grim morning, but (at first) things were going well.
The offer was fully subscribed, said the new-ish CEO Martin Henricson whom we spoke to, in the range of SEK 52-60 per share, when EPiServer was readying for the IPO war.
What was on the table:
- existing shares
- a new issue of shares
In the U.S. media, we cannot disclose the actual numbers, but some Swedish media outlets were able to, should you be curious.
And Here's Why the Withdrawal...
It got grim when the first day of trading never happened, as the Web CMS vendor realized that it was time to abort the IPO. Henricson says the financial market was "a bit difficult."
Despite all the confidence they had, the "volatile and unstable market" was the reason they had to pull off the IPO deal.
It's "timing and bad luck," was the CEO's conclusion.
Even though EPiServer tried their best to focus the business towards being more precise on strategy and operational perspectives, the IPO didn't work out. There was a potential to succeed with going public, but they failed.
The IPO talks started around late 2009, with execution around February 2010. All pieces seemed to be in place. Yet, the puzzle has collapsed.
Peter Larsson, Chairman of the Board, comments:
During the weeks that we have presented EPiServer to investors both in Sweden and internationally we have experienced strong interest in our company. Despite this interest, the current stock market sentiment is not strong enough to ensure a successful listing of EPiServer for existing and new shareholders.
The What-If Alternatives
Theoretically speculating, should they have set the first day of trading for a few days earlier, the outcome could've been different, said Henricson. EPiServer could've extended the offering for another 5 days. The latest they could do that was before the trading begun, but EPiServer still felt safe and secure.
Did EPiServer evaluate itself more than the market was ready to accept and pay for?
Are There Troubles in the EPi Land?
Well, they tried. And they failed. They may try again. The mid-market .NET Web CMSs are stronger than ever.
Should the global network of partners (the foundation of EPi's business model) be concerned?
Since its conception in 1994, EPiServer has been steadily growing. In 2009, they reported net sales of SEK 192 million, operating profit of SEK 39 million and an operating margin of about 20%. According to Henricson, the net debt of SEK 30 million that EPiServer has "is not a lot." "We don't need additional cash," he concluded.
Others are not as optimistic about EPiServer's "not very impressive cash flow." Even though EPi might've jumped the gun and failed to make it as a publicly traded company, we'll see how they deliver on the promise of the "engaged web."