When news of Goldman Sachs $2 billion investment in Facebook first broke, many interpreted it as the final sign of an imminent IPO.
Goldman was injecting cash into Facebook on favorable terms in order to win itself the inside track to manage the IPO, many reasoned.
But NYU professor Scott Galloway has an intruiging theory. He says we may be seeing the emergence of a new, semiprivate IPO.
In this model, a small group of blue-chip investors get a piece of Facebook. Shares become more liquid, enabling employees to cash out, but the company avoids the hassle of public disclosure, analyst calls and quarterly benchmarks.
Of course, the SEC is looking into the trade of Facebook shares, both through Goldman’s special vehicle and on exchanges like SecondMarket, to see if it has reached the threshold of 499 shareholders, and must begin to make its finances public.
In the meantime, however, the real loser, says Galloway, is Wall Street. ”I think going public is vastly overrated and I think this next generation of entrepreneurs has realized that,” says Galloway. “”I think that the SEC, the NYSE, the Nasdaq and the whole industrial complex around taking companies public is the loser.”
There’s no small irony here, of course, that Mark Zuckerberg, who preaches the virtues of total transparency, is doing everything he can to avoid going public.
bpopper at observer dot com – @benpopper