Monday, August 28, 2006
Rich Tehrani at TMC writes in Customer Interaction magazine talks about consolidation in the telecom space - and how it is cyclic. He also notes: 'Many companies, especially venture backed organizations, have “exit strategies” they are looking to exploit. Initial public offering (IPO) and M&A are the two primary options that companies have. In the last five years, the IPO market has become much more complicated and expensive. Companies must show profit — and lots of it — to effect a good IPO. In addition, the extra overhead imposed by Sarbanes-Oxley compliance has scared many companies away from going public at all. This leaves acquisition as the best way to allow initial investors to get their money back. Couple this with the fact that the market is coming out of a very rough period during which many companies were valued far lower than the investors expected. As a result, small to medium-sized companies in the marketplace need to exit, and getting purchased is the easiest way to attain this goal."