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Market Volatility

The financial markets were more buoyant earlier this year, hence all the IPOs. But then a fair amount of uncertainty, with a negative tone, set in, causing the markets to increase in volatility and become a less attractive option for those seeking to go public via IPOs. Less attractive does not mean the option was eliminated.

When the markets are buoyant they are reflecting optimism and thus, financing is more plentiful. As I’ve stated before, private equity firms and venture capitalists, among others, can take their companies public, providing them with more options and beginning the trickle down effect. When equity markets are optimistic, debt financing is also easier with investors more open to financing options that don’t require myriad covenants (aka safety nets or provisions). Debt financing during this time typically comes with lower interest rates for the same debt that, in a more volatile market would require more.

So Groupon has registered for an IPO and will likely move forward with sales of its shares at a $12 billion valuation. That’s down from the $15-$20 billion that it could have gotten had it been ready in April, May or June. C’est la vie. Personally, given how some of the other IPO shares have performed post-IPO, and given the earnings expectations, I think Groupon’s $12 billion valuation is much more fitting.

Any thoughts? I’d love to hear them.

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About Tiffany C. Wright

Hi! I,Tiffany C. Wright, am the author of the ebook, "Help! I Need Money for My Business Now!!" and the book "Solving the Capital Equation: Financing Solutions for Small Businesses", available on Amazon. I am the president of Toca Family Business Services, a short-term & project-based interim management & strategic and financial advisory firm, located in Atlanta, Georgia. In the past five years I've helped small and medium companies restructure and obtain over $31 Million in financing and a similar amount in purchase orders and contracts. I have an MBA in Finance and Entrepreneurial Management from the Wharton School of Business at the University of Pennsylvania and a B.S. in Industrial and Systems Engineering from The Ohio State University. Personal: I enjoy investing. I am a prodigious reader of everything from business books, magazines, and newspapers to horror and popular fiction. I read 4-6 books per month. I also love to travel. I've been to 33 countries on 5 continents and lived in Japan for 2.5 years and aim for a foreign locale twice a year. I am also an athlete and run track on the Master's Circuit. The highlight was placing 7th in my age group in the 2007 World Master's Track and Field Championships in Italy.

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The Resourceful CEO, Tiffany C. Wright

the president of Toca Family Business Services, a strategic and financial advisory firm which provides short-term & project-based C-level management. She is the author of Solving the Financial Equation: Financing Solutions for Small Businesses, available on Amazon.

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