How CEOs can Utilize an IPO

When in 2002 Microsoft announced to go public, everyone got shocked about how Microsoft will leave its established way and will become a public company. But there was nothing like that, the core methods of performing were the same just now at a bigger platform. For Microsoft the offering was neither typical nor uneventful.

An IPO can change a company. Many people and the whole media believed that going public will eliminate or remove companies’ ethos, said Danny Richard. Microsoft wanted to comply its financial data with the country’s securities law and for this IPO was a must. But securities law of the country have not required Microsoft to sell shares to the public. Microsoft were given three choices –

1. To decrease the number of shareholders.

2. Continue to be a pvt company but need to report financial statements.

3. Or can go public.

Microsoft chose a technology driven path by offering an IPO

Microsoft took IPO not just as some other strategy but as a big path breaker. Determine how to sell, at what cost, whom to be sold and many more. Microsoft wanted their users too, to be part of this offer with government authorities. Next Microsoft analyzed how to test its investor, for this it went for Dutch auction in which the company segregated investors on the basis of how much each investor is willing to pay. This way they can move from top bidder to lowest one. As Microsoft auction was at a larger scale it needed a system that can support increased sales. To make the process more structured Microsoft stopped interference of media and press. In the thorough process of IPO Microsoft had realised that there is a gap in what was written about them and what is the truth. Microsoft has published its financial report but it is of no longer importance to people.

As the IPO data was approaching Microsoft found that they lack 2/3rd of independent directors which is important for being on Wall Street listing and London stock. Also the media had become more intense by continuously posting and updating about Microsoft.

SEC’s concern was to design effective auctions and comfort for companies. SEC’s job was to evaluate the process and to quantify the complete prospectus. Microsoft wants to go public in July but that time Wall Street is on vacation. Microsoft’s complete process is taking time so it was obvious that process will only get started by July. Seeing the complete process SEC trying to convince Microsoft to delay the project. Even after so many obstacles Microsoft started its bidding in July. It was a highly tough and complicated situation. Already Microsoft had faced month-long criticism SEC restriction was continuous and it hampered Microsoft employees too. Also London times and Wall Street had made continuous pressure. They wanted Microsoft to not put extra details on the server.

On the auction day, bidding for Microsoft shares didn’t go well. Microsoft gets anxious about what went wrong. Weather online information sharing or the approach chosen for auction went in the wrong direction. By the end of bidding it was clear that Microsoft will not be able to sell all the shares. Microsoft wanted to delay the IPO and weigh the price later. Microsoft closed the process.

Countdown

After a few troubles, trading started again with the countdown. First trade was around $100 which was 19 % higher than before. Now people are buying at a huge volume. At the end of the day, Microsoft went public. By the next week the stock market was trading at $106 to $120. IPO had wasted so much time for Microsoft so Microsoft decided to close the process before getting back to business. Even Microsoft doesn’t know why suddenly the stock price rose. A lot of complications arise in the IPO of Microsoft. Whole process was too demented.