Is Facebook’s IPO coming sooner than expected?
While the Securities and Exchange Commission is investigating the private market of Internet companies including Facebook and Twitter, Goldman Sachs has managed to acquire a 1% stake of Facebook for $500 million, bringing the potential value of the company to $50 billion.
So far Zuckerberg has dismissed the possibility of Facebook going public soon, but insiders are betting in an early 2012 offering, after Facebook’s board of directors has indicated the IPO is not completely out of the question.
Facebook needs to raise money to keep key employees, allowing them to sell some of their stake privately to benefit of the current valuation of the company. Nobody knows what is the real value of Facebook in a potential IPO, but investors are looking for the next bubble in the Internet market, and social networks like Facebook, Twitter and LinkedIn are lining up to be the next Google.
Goldman Sacks was a key investor in the early days of Google, and it is believed they forced the company to an IPO in 2004, after attracting heavy private investments. At that time Google’s founders forced Goldman Sachs out of the Underwriting deal for trying to benefit offering better deals to their biggest customers. Nevertheless Goldman Sachs profited heavily with the Google IPO.
Goldman’s involvement means it may be in a strong position to take Facebook public when it decides to do so in what is likely to be a lucrative and prominent deal.
But Goldman’s involvement may force Facebook to start disclosing financial information to the public if the SEC finds that the investment firm is using the deal to sell Facebook stake to others, falling under the rule that requires disclosure if the number of investors in a private company reaches 500 or more.
Facebook’s IPO will probably be the biggest public offering of the decade, and the next Bubble, this time in Social Networks, will only begin.