On the heels of my, "Of IPOs, DotComs and other Gigaflop investments" post yesterday, I've received a press release that GlassHouse Technologies has cancelled its upcoming IPO. The election to withdraw shouldn't be viewed as a negative against a company. There are reasons for going public and there are reasons for withdrawing an IPO.
An IPO, or Initial Public Offering, is a great way for businesses to raise capital by allowing outsiders to invest in the company and share in its success. The downside is that you also share in their failures and missteps. The IPO also helps value a company. During the discovery or bookbuilding process, a company's value is analyzed and set for the offering.
If the price is too low, this sometimes undervalues the company and the company has the option of withdrawing the IPO. Market conditions may prompt a withdrawal. If a company's officers want to infuse the business with expansion money, then the IPO has to be able to fund that expansion. IPOs can be withdrawn for many reasons other than a poor evaluation or Bear Market.
The officers may "test the waters" to see what kind of money can be raised through an IPO and then decide to seek private funds instead. The GlassHouse decision is based on market conditions. IPO withdrawal is very common based on market ebbs and flows.
On November 21, 2011, Patrick J. Scannell Jr. assumed the role of GlassHouse Technologies CEO. This change in leadership may have also prompted an internal business direction change. It is common for new leaders to consider all that is before them prior to making decisions that affect the entire flavor and history of a business. A geographically diverse company like GlassHouse Technologies must consider global indicators in those decisions.
The entire contents of the announcement is as follows:
GlassHouse Technologies Announces Decision to Withdraw IPO
FRAMINGHAM, Mass.--(BUSINESS WIRE)--GlassHouse Technologies, a global provider of cloud, virtualization, security and next generation data center consulting and managed services, today announced that based on current market conditions, it has chosen not to proceed with its planned initial public offering at this time. The company intends to withdraw its registration statement on Form S-1 as filed with the Securities and Exchange Commission.
“Obviously the economic climate continues to be volatile, and we feel these are not the optimal conditions for GlassHouse to move forward with an IPO,” said Patrick J. Scannell, Jr., CEO of GlassHouse Technologies. “We are focused on being the leader in vendor independent services that provide strategy and operational support for our customers as they confront rapidly evolving end-user, cost and security demands on their IT environments.”
About GlassHouse Technologies
GlassHouse Technologies is a global provider of data center infrastructure consulting and managed services. In a rapidly changing IT environment, GlassHouse partners with customers to define a data center strategy, execute that plan and operate their environment, helping clients address the complexities of cloud, virtualization, security and next generation data centers. Our constant focus is on cost efficiency, risk mitigation and service improvement. This is provided through Transom, our unique business model comprised of proprietary software tools, methodologies and domain expertise. We help deliver on the promise of agility and usage-based spending in the next generation infrastructure paradigm. This journey is significant and requires an experienced and pragmatic guide to help customers achieve their goals. Our experience is based on thousands of projects in addition to ongoing daily operations of customer environments. Visit the GlassHouse blog for expert commentary on key data center issues facing today's enterprises and follow us on twitter @GlassHouse_Tech.