Problems Faced by Google IPO

Problems Faced by Google IPO

When Google reached 500 shareholders, in accordance with the American law they were presented with three options.

1) To stay a private company, but report their financial results like a public company

2) They could go public

3) They could decided to buy back the stocks (from their employes)

It was a hard decision but Google decided to go pulic. There were a lot of issues to be dealt with this issue. There was a lot of negeative reaction to be dealt with. Google could be making itself from an innovative company to a conventional company, it would lose its objectivity and independence. There were a lot of fear and the media trashed Google on their decision.

Keeping innovation at its core Google did not want an ordinary auction. After much thought, they decided on have the benifts of the auction not only going to brokers but also to the open public. And again Google got a backlash from the media.

By this time Google had gone into a quiet period in accordance with the laws, that is they stopped communicating with the press. This in some ways helped to calm down press from speculating. At the same time Google felt that even negative press was bad, simply because of the publicity the transacation was getting.

Google wanted to prevent a pop of their price at auction. After much discussion they decided to sell at 85$ a share.

It was about this time that a major crisis hit Google. Larry and Sergi the founders of Google gave an interview to Playboy and obviously there was a dicussion of buisness. This was seen as a violation of the quiet period and this could lead to the auction being postponed. However Google reacted fast and it added this interview into their offical filing.

When the auction finnaly occurred it did not manage to esacpe the pop and it shares sold for 100$.

At the end the IPO was sucessful. Google still managed to maintain its image of being an innovative company. It went through a storm and came out unscath and it was stronger than ever in the market. It was set to grow to higher heights.

IPO in India follow a similar system. So what can Indian Companies learn from the Google experince.

n They must always think about the customer. Google does this by have a format of auction that benefits even the customers and not just the stock brokers.

n Be the same. When going through with IPOs it is not easy for companies to remain the same to their core, simply because there are a lot of changes going about. However Google bore with the storm and made sure it did not shift it’s ideals inspite of the flak it drew from crtics and analyist.

n Get what you want. In the auction Google tried to avoid the pop. It did not act hard enough. Though it did not want the pop, it allowed the expectation to grow amoung the public and not only that it opened it doors to the public without sufficient restrictions.

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