Sep. 12, 2013
Leif B. King
See more on Leif B. KingSkadden, Arps, Slate, Meagher & Flom LLP & Affiliates | Palo Alto | Practice type: Corporate
Remaining private or going public - that was the question pondered by Survey Monkey, an online consumer survey platform.
"They took a good hard look at the pros and cons of pursuing an IPO in the near term versus staying private longer," King said.
Survey Monkey opted to stay private, finalizing a two-stage deal in February that involved the $800 million debt and equity recapitalization of the company at a valuation of about $1.35 billion.
The transaction allowed the company to cash out early shareholders and retire additional debt without pursuing an IPO.
The recapitalization was done in two stages. First, the existing early investors sold about $444 million in equity to a group of new and existing shareholders. That sale closed in late December. Survey Monkey then raised an additional $350 million through debt financing. The proceeds from the debt were to be used to buy shares from employees and shareholders, as well as retire the company's existing debt.
Other similarly situated high-tech companies in Silicon Valley took note of the deal, King said.
"We think for many companies it would make sense to use a similar type structure and take advantage of the private capital market, rather than the public ones."
Going public has its downsides, King said.
"Once they go public, the world can see every detail of the business - both competitors and customers - and it can be very disadvantageous to go public too soon."
It's also expensive, King said. "For many, the tradeoff is worth it because they have access to the public capital market, which can give them the capital they need to grow to the next level. But for some companies, like Survey Monkey, it's not worth the trade off."
In another significant transaction that closed in June, King represented EnergySolutions Inc., a nuclear services company, in its $1.1 billion acquisition by a subsidiary of Energy Capital Partners II LLC, a private equity firm.
"The transaction spanned two years, which is a long time," King said. "The company thoroughly investigated its options."
- PAT BRODERICK
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