Big-Name IPOs Put Going Public Back in the Spotlight

By Carol Tice

After being pretty much pronounced dead in early 2009, the initial public offering (IPO) is officially back this week with big-money offerings that observers are expecting will help perk up the marketplace.

The marquee name is General Motors, which is raising a cool $10 billion as it pays off its government bailout. But the real news is the market has been recovering steadily for months, and GM will just help more people notice the trend. That's good news for the backlog of interesting smaller companies that has been circling the IPO airport trying to find enough lift for takeoff.

Some really interesting companies have been taking the IPO route in recent weeks, including The Fresh Market, an upstart Whole Foods-type regional grocery chain that raised $290 million. Primo Water, which sells water dispensers, raised $100 million.

Many more are still on deck. For instance, Zipcar -- the fast-growing car-sharing company, which hasn't yet made money -- filed back in June but has yet to go.

For much of 2009, the only companies going public many weeks were either Chinese, or a real-estate investment trust (REIT), or a special purpose acquisition company, or SPAC. That last is really just a lump of money looking to acquire companies. In other words....bo-ring, and nothing that indicated small U.S. companies would have any luck in the IPO markets.

But this week, GM is joined by two other major companies in making an IPO debut. Also on the calendar are Caesars Entertainment and management consultancy Booz Allen Hamilton. The return of name brands to the IPO markets will likely get a lot more companies -- particularly ones with venture capital backers itching for a payday -- to give the public markets another look now.

To date, the IPO volume in 2010 is about double that of all of 2009, Renaissance Capital reports. Comparing year-to-date, we're waaay ahead -- there were only 82 deals at this point last year, versus 235 in 2010. Even more interesting for small businesses, the average company age is getting younger this year -- 15 versus 19.

Obviously, that's still pretty conservative. The average age was 11 in 2007, Renaissance Capital's data shows. But it shows the pendulum is swinging back again toward the IPO markets being a bit more welcoming to smaller companies, especially ones with a great story.

Photo via Flickr user H.G. Wood Project