As Companies Go Public, Power Stays Private
from the inside-out dept
As we've noted several times, the tech IPO came back in a big way this year, most recently evidenced by VMWare's meteoric launch out of the gate. While this is good news for companies and their investors, Kevin Kelleher argues that we're seeing a disturbing trend in the way these deals go down. In many instances, the terms of the deal are such that the general public shareholder has little power in the newly-public company, with most voting power concentrated in the hands of a select few insiders. What's more, in many instances, the companies have sold stakes in themselves to certain outside investors at a price below what was available to the public. It's easy to argue that such moves represent greed and a desire to keep the spoils concentrated, but there may be other reasons for these actions. As the rise of private stock exchanges suggests, public shareholders are increasingly seen as a liability, whether it's due to the threat of shareholder lawsuits or activist investors. Kelleher's concern is for the "little guy", as he puts it, but it's not clear that most investors actually care about things like voting rights. As long as investors understand where they're at, and can weigh the risks accordingly, certain trends in governance structure shouldn't be particularly worrisome.
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Filed Under: governance, ipos
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At the same time, inflated concerns over share price, and the attendant concern over quarterly profits are principle problem with public companies, not that share holders occasionally vote someone out.
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Democracy is not "he who has the most money gets the most votes"
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Re:
Firstly, we're not talking about a Government here, by the people and for the people, we're talking about a company, by the money and for the money. Literally. You may feel that's a bad thing, but then that's another argument, entirely, one I don't really feel the need to participate in.
Secondly, yes, it's kind of democracy. Those do come in different flavors, y'know. And it has a very literal "put your money where your mouth is" quality to it. If you don't like it, don't participate. Put your money towards beanie babies or something. I'm sure they'll be valuable someday.
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As it should be
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Realistic
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@ Rickler
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shareholders a liability?
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