Less than a year since being named Twitter’s new Chief Financial Officer, Mike Gupta has been seen speaking with banks about collaborating with the organization’s initial public opening, stirring speculation that a debut may be around the corner. Gupta has been working overtime with CEO Dick Costolo to explain the Twitter business model to potential investors across the country. They intend to clearly articulate how the social media giant can tweet its way to $1 billion in sales by the end of 2014. They also intend to communicate a plan for long-term growth.
Indeed, both Gupta and Costolo understand the general concerns surrounding Twitter and its ability to sustain lucrative revenue. Regardless, Gupta’s ability to explain complex work processes simply is expected to be a major asset as soon as the company announces its IPO. Prior to joining Twitter, Gupta spent the last decade climbing the financial ladder in Silicon Valley. He’s worked for Yahoo, Microsoft Corp., and Zynga.
Of course, gearing up for an IPO is no simple task. It’s been reported that Gupta is currently building a team of financial experts, including Cynthia Gaylor, who brings 17 years of investment banking with Morgan Stanley to the table. All eyes will remain on Twitter, especially since it will be the first social media IPO since Facebook, which lost approximately half of its value within half a year.
Key Considerations in Planning an IPO
For growing a private corporation, the advantages of undertaking an IPO are certainly alluring. The rapid infusion of new money will alleviate any current financial struggles concerning debt, product development, and meeting its advertisement commitments. The reality is that planning an IPO isn’t as simple as it sounds. Key considerations include:
- Market appetite. There’s still some hesitance after the 2008 collapse, but investors are more willing to take risks as the economy sluggishly improves. Be aware of key performance indictors, as investors want to see consistent growth and accurate revenue forecasts.
- Pricing and discounts. One of the more important components is by the underwriters, who price the IPO stock and create discounts to nullify additional risks. With that being said, the underwriter(s) should be one of the most important considerations during the IPO planning process.