NameMedia’s withdrawn IPO more painful than it looks.
It may appear that NameMedia’s decision last week to to drop its planned initial public offering is just a temporary setback. Aside from the costs of filing its S-1 to go public, going on the investor roadshow, and obliging quite period regulations, did it really cost the company anything? The answer is yes. And it’s not the time, money, or decreased morale that hurts the most. It’s the disclosure.
By filing to go public, NameMedia’s competitor’s were basically handed the company’s playbook. Competitors know how the company operates. How much it pays key employees. How much debt it has and when it is due. And how much it paid for acquisitions including Afternic, SmartName, and GoldKey. While some information in NameMedia’s S-1 filing was redacted, such as its payout percentage with Google, it still disclosed much more than any private company would ever offer up.
NameMedia isn’t the first company to file for and subsequently back out of going public. The Go Daddy Group, parent company of GoDaddy.com, filed to go public in 2006. It’s filing included a wealth of insider information. In fact, it was the S-1 filing with the Securities and Exchange Commission that provided the definitive link between the company and Standard Tactics. Trying to go public also stifled out-spoken founder Bob Parsons, who had to limit his company talk during the so-called quiet period.
There are a handful of other public companies in the domain industry. They each have to disclose information about their operations that they’d prefer to keep private. We know how much Fabulous pays out to its parking customers. We have a good idea how much money Sedo makes from domain parking. And we know exactly how much compensation the CEO of Tucows gets.
This is information that competitors such as Oversee.net, Thought Convergence, and eNom get to keep private. And it gives these private companies a competitive advantage.
RKB says
Agree, most of that info we have no clue about private companies such as DS.
As usual, nice read.
Patrick McDermott says
“Trying to go public also stifled out-spoken founder Bob Parsons, who had to limit his company talk during the so-called quiet period.”
Over drinks with Candice, I learned Bob secretly had his tongue surgically removed temporarily for the quiet period.
Just kidding,Bob.
“drinks with Candice” -in my dreams! 🙂
RegFeeNames.com says
Spot on post Andrew once again.
These guys really need to wake up – If you are planining on going public then you need make sure you do!
Yes the current climate makes it hard to actually raise your cash hence why so many people are pulling out of a public offering but these guys need to look at this – many people seen this comming and I for one wouldnt have put my company forward if I knew this was going to happen.
Regards,
Robbie
ParkingFirm.com says
You think NameMedia will do justification to its investors by going public?
Does anyone have information on how they have been doing so far with their yearly returns over investment etc etc..
I would like to know more about this particular company 😉
Good one Andrew.
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Jay M
ParkingFirm.com