Facebook will go Public with an IPO, Initial Public Offering, of 10 Billion Dollars sometime between April and June of 2012. This bid offering would make Facebook’s Stock Market value over 100 Billion. There have not been any final statements released as of yet, but if Facebook does go public at this amount it would be larger than when Google went public in 2004.
Why should Facebook go public? It increases their chances of more investment, once a company reaches 500 Investors they are required by U.S. law to publish their data about the company’s financial performance. The two main reasons that a company would go IPO according to James Brau and Stanley Fawcett Professors at Brigham Young University are “To raise capital and to enrich the company’s founders and insiders.” Another reason that Facebook is going IPO now is that it does not want the competition such as Google+ to get their lead in Social Networking.
There have only been three companies to date that have issued IPOs of the magnitude that Facebook will be, Visa came in 1st with $19.7 Billion in 2008, General Motors with $18.1 Billion in 2010, and AT&T Wireless with $10.6 Billion in 2000. The largest IPO a company has issued to date is $21.9 Billion in 2006 by the Industrial & Commercial Bank of China. When Facebook does go public if they keep the current IPO they would have the largest Internet and Technology company IPO to date.
There are downsides of Facebook going Public. They will now have to open their books and report their earnings both quarterly and annually. Facebook is also required to disclose the amount of shares that the Executives hold. Another downside to going Public is the SOX or post-Enron reform Act Sarbanes-Oxley signed by George W. Bush in 2002. This new law requires that businesses keep better books but is also to many the reason why U.S. IPOs have declined in the last 10 years.
When Facebook finally does hit Public, you can be assured that Goldman Sachs is going to be helping to underwrite the IPO. Goldman Sachs invested $450 Million in Facebook in 2011, ensuring their say so in how the IPO will come about.