“2006 is shaping up to be the busiest year for IPOs since 2000. The number of filers is up 22% over the same period last year.” (Source: Renaissance Capital IPOhome.com)
Ernst and Young’s 2006 Global IPO Survey points to the following: “Following the turning point in 2004, IPO activity gained momentum for a second successive year in 2005. Overall, the total capital raised in IPOs saw healthy growth while deal numbers remained steady. Due to the cyclical nature of the IPO markets, it is difficult to predict trends in activity in 2006; however, there is a strong pipeline of companies ready to come to market, and if conditions remain favorable, then 2006 should be another good year for IPO activity.”
Understand the relationship between “going public” and philanthropy
The idea of giving original stock in a start-up company prior to going public is gaining ground. Consider the recent example at Oregon State University where a donor contributed shares of founders’ stock to be held in a venture philanthropy fund, a portfolio of start-up holdings, until his company went public. At this time the proceeds from the future sale of the stock would support programs in that university’s engineering program. Another useful example is offered by the University of Florida Foundation where a retired university faculty member was also the chair of the Board of the University of Florida Tissue Bank. The Tissue Bank was so successful that it resulted in the creation of a for-profit entity. The university’s share of the IPO was $60 million out of the IPO worth $350 million.
Don’t limit your thinking exclusively to your prospects in the United States
While it is true that the United States remained the top country by total capital raised in IPOs in 2005, the global IPO volume grew to $167 billion – the highest mark since 2000 (as per the Ernst and Young 2006 Global IPO Survey), Further, a key trend in 2005 was an increase in emerging market activity, principally driven by China, Russia and Poland. The survey states that “the trend for 2005 is strictly a continuation of the China growth story. The economy has been growing at least 8 percent a year for 20 years.”
Adopt the “just-in-time” mentality in your development programs
Many of us continue to operate on the traditional “moves management” model where prospects are engaged along a paced and predictable path towards solicitations. In today’s market, individual entrepreneurs and large companies such as Blue Cross Blue Shield are offering IPOs. Therefore, it is imperative that your prospect research and major gift professionals be attuned to these opportunities and adjust the cultivation and solicitation timetables accordingly.
- The equivalent of an alert system needs to be established for your top prospects to learn of these events and signal action.
- Gift professionals need to be in regular contact and have garnered the degree of relationship to gain knowledge of when IPOs are in the offing.
- Regional and national trends associated with particular types of companies such as the mutual insurance industry need to be known and tracked. Cultivation programs need to be implemented in earnest to position your institutions for when that right time comes.
- Given the scope of such activity in international markets. You should identify and engage alumni in those countries, again to be in the position to make a solicitation when the time arrives. Cultural distinctions and considerations may well require longer standing relationships to optimize your position to deliver the solicitation.