Last week 104 West sponsored a luncheon with the Rocky Mountain Venture Capital Association where we hosted Kevin Tice and Ed Maguire from the Global Technology Investment Banking practice at Merrill Lynch. About 40 members of the association and invited guests attended the event at the Denver Chop House. With all that is going on Wall Street, we had a lively discussion on the effects of the current financial crisis on early stage companies and their need to raise capital in the public markets, as well as the current M&A market climate.
Among the more interesting discussions centered around the shifting metrics for potential IPO candidates. Tice, who serves as the vice chairman of Merrill Technology Investment Banking, noted that companies with solid revenues over $100 million, top and bottom line growth at between 10-15 percent and recurring revenues will make the promising candidates for the public markets once they emerge from the current market conditions. While this may force some early stage companies to wait longer to come to the public markets, it lowers the classic go-go bar we’ve seen since the halcyon days of the dot com era.
With only four companies coming to market this year and a pipeline full of prospects, the consensus was that the massive shifts in the bedrock of Wall Street will certainly shape the IPO markets for early stage companies, and probably the M&A markets too.