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Grant Thornton have recently put up for debate a Paper titled: Why are IPOs in the ICU?
http://www.grantthornton.com/staticf...0ICU_11_19.pdf
My immediate response is to dare to suggest that Grant Thornton are wrong. To paraphrase: It's the Product - Stupid!
This is a much deeper problem than simply a matter of access to IPO's and while the Grant Thornton paper has merit, it only represents the problem from their particular viewpoint. The overall problem has been a complete lack of understanding of the underlying problem right at the grass roots of society where there is no access to capital at all. None, of any sort. The result has been a failure to recognise that, while everything seemed to be on track through the 1990's, the true fact was instead that the numbers of new companies being formed was drying up due to there not being any source of available capital taking a long term viewpoint - alongside a complete failure to recognise that there had been in progress a long term collapse in manufacturing; which was by then reaching its zenith.
The underlying fact was the Western economic model lost countless thousands of privately owned companies while fewer and fewer were being formed BELOW Grant Thornton's observable horizon.
At the same time, everyone, the entire financial community from Government downwards, stopped thinking about the effect of placing almost all the capital, (savings?), of the nation into the hands of Institutional Investors that were by then, through a variety of regulatory measures, now totally constrained against investment into the grass roots of society. The reality of everyone focusing upon the IPO resulted in no one recognising that there is a desperate need for perhaps several tens of thousands of sub IPO company formations to be adequately capitalised from the savings of the nation.
I first set out my thinking to The Governor of The Bank of England, Eddie George in 1994 and recently posted this as a proposal for what I call a capital Spillway Trust here. http://www.chriscoles.com/page3.html
Venture capital was, is, totally focused upon a tiny fragment of the capital needs of any nation but falls short of the needs of a fully free enterprise nation. That process, Venture Capitalism, is not, in my humble opinion, free market based and as such is doomed to failure over the long term as more and more new ventures reject the VC route to available capital on offer. (What, you have not noticed?). It is this simple fact, the VC product has failed, not succeeded and its marketplace has, as a consequence, almost completely dried up. Oh yes, the product is not selling....... Classic market dynamics in progress.
But there is no other route to available capital as it is all mostly now in the hands of Institutional Investors that have no retained function for the long term capitalisation of the new, grass roots company. THAT is the underlying reason for the fall off in the IPO marketplace. I have tried my best to illuminate the debate here on iTulip. http://www.itulip.com/forums/showthread.php?t=5166
The US does not have any savings, or classic "Savings Institutions", or a recognised long term strategy to capitalise your capitalist free enterprise nation; particularly at the grass roots of society, very particularly with capital with a long term view. What you have instead created is a feudal mercantile economy that has now failed. The IPO problem is merely a single symptom of the overall problem that must now be addressed if the Western Capitalist system is to continue to prosper. You have to return to good old fashioned Capitalism and relearn how to create new, free enterprise companies at the grass roots of society; that inevitably lie a very long way beneath your present horizon, but surely not beneath your dignity?
It's the product - Stupid. It is not selling. That is the marketplace working perfectly and it is the players in that market that have yet to accept the truth of it.
Chris Coles
http://www.grantthornton.com/staticf...0ICU_11_19.pdf
My immediate response is to dare to suggest that Grant Thornton are wrong. To paraphrase: It's the Product - Stupid!
This is a much deeper problem than simply a matter of access to IPO's and while the Grant Thornton paper has merit, it only represents the problem from their particular viewpoint. The overall problem has been a complete lack of understanding of the underlying problem right at the grass roots of society where there is no access to capital at all. None, of any sort. The result has been a failure to recognise that, while everything seemed to be on track through the 1990's, the true fact was instead that the numbers of new companies being formed was drying up due to there not being any source of available capital taking a long term viewpoint - alongside a complete failure to recognise that there had been in progress a long term collapse in manufacturing; which was by then reaching its zenith.
The underlying fact was the Western economic model lost countless thousands of privately owned companies while fewer and fewer were being formed BELOW Grant Thornton's observable horizon.
At the same time, everyone, the entire financial community from Government downwards, stopped thinking about the effect of placing almost all the capital, (savings?), of the nation into the hands of Institutional Investors that were by then, through a variety of regulatory measures, now totally constrained against investment into the grass roots of society. The reality of everyone focusing upon the IPO resulted in no one recognising that there is a desperate need for perhaps several tens of thousands of sub IPO company formations to be adequately capitalised from the savings of the nation.
I first set out my thinking to The Governor of The Bank of England, Eddie George in 1994 and recently posted this as a proposal for what I call a capital Spillway Trust here. http://www.chriscoles.com/page3.html
Venture capital was, is, totally focused upon a tiny fragment of the capital needs of any nation but falls short of the needs of a fully free enterprise nation. That process, Venture Capitalism, is not, in my humble opinion, free market based and as such is doomed to failure over the long term as more and more new ventures reject the VC route to available capital on offer. (What, you have not noticed?). It is this simple fact, the VC product has failed, not succeeded and its marketplace has, as a consequence, almost completely dried up. Oh yes, the product is not selling....... Classic market dynamics in progress.
But there is no other route to available capital as it is all mostly now in the hands of Institutional Investors that have no retained function for the long term capitalisation of the new, grass roots company. THAT is the underlying reason for the fall off in the IPO marketplace. I have tried my best to illuminate the debate here on iTulip. http://www.itulip.com/forums/showthread.php?t=5166
The US does not have any savings, or classic "Savings Institutions", or a recognised long term strategy to capitalise your capitalist free enterprise nation; particularly at the grass roots of society, very particularly with capital with a long term view. What you have instead created is a feudal mercantile economy that has now failed. The IPO problem is merely a single symptom of the overall problem that must now be addressed if the Western Capitalist system is to continue to prosper. You have to return to good old fashioned Capitalism and relearn how to create new, free enterprise companies at the grass roots of society; that inevitably lie a very long way beneath your present horizon, but surely not beneath your dignity?
It's the product - Stupid. It is not selling. That is the marketplace working perfectly and it is the players in that market that have yet to accept the truth of it.
Chris Coles