Category Archives: (Wh)Academia

How to rebound from a failed IPO

Despite going through the time-consuming IPO process, roughly 1 in 3 would-be issuers fails to complete its IPO and instead withdraws. Not all withdrawals are bad, and in fact some firms instead (e.g.) accept a buyout bid while others simply return to private status and raise no more money. In a paper with Dr. Craig Dunbar, we study the determinants of the success of firms that “fail” IPOs. Firms with venture capital backing or prestigious investment bankers are 24% and 8% (respectively) more likely to rebound from a failed IPO to conduct a private placement, merger/acquisition, or to re-file and complete an IPO. As well, firms with more underwriters on their IPO and with more revenue obtain better valuations in those post-withdrawal events. The former occurs because the underwriters compete to advise the withdrawn firm on its subsequent deal. Firms considering the IPO path and want a stronger fallback position should generally wait until revenues are strong, obtain venture capital backing, hire a prestigious investment bank, and ensure there are enough underwriters involved to foster a healthy competition for their business. Once gain, competition is good.

“One-uppers”, “Yeah, buts”, “MMIs”, “Debbie downers”

I have been fortunate to work with hundreds of companies and also to study managers in the workplace from an academic perspective. After a discussion with an organizational behavior professor colleague of mine, I want to start a dialogue about some counterproductive “types” of managers — do you recognize these? We need to write a paper on this.

a. The “One-upper”. These people “one-up” everything you say. In a misguided attempt to empathize, they have done everything you have, but worse (or better!). You know, “I have four projects, I am swamped”, yields a, “Yeah, I have six and I know what you mean.”

b. The “Yeah, but”. How about the manager who always responds, “Yeah, but…”. It is not necessarily negative, but rather contradictory. “We should price this at $X”, is followed with, “Yeah, but if we do…”.

c. The “MMI” – Me, Myself, and I. Every sentence is brought back to a point about oneself. While “I” is the most common word in the spoken language, how much business dialogue is about oneself?

d. The “Debbie downer”. The name taken from SNL, some managers focus on the worst, the flaws, the risks, the negatives. True, it is a great idea to ensure the holes are plugged. Balancing criticism with praise for the positive will surely motivate better.

To be fair, most all of the people I have ever worked with do not fit these stereotypes and instead were/are quite positive, nice, and decent people. However, it is fun to stand back and analyze those others.