Facebook IPO – Biggest Stock Market Launch Ever?

Feb. 28, 2012 - PRLog -- Founded in 2004 by Mark Zuckerberg, now aged 27 and his friends while still at Harvard, Facebook launched their Initial Public Offer (IPO) process, which is their first sale of stock to the public.  Speculations are that Facebook, the No.1 social media website could make thousands of millionaires out of their employees.

Whilst early employees will get the bigger bucks the wealth will seep down to others since most employees receive some kind of equity-based compensation, such as restricted stock units or stock options as well as their salary.  Staff past and present are already writing their wish lists of what to do with the massive windfalls but securities regulations in the US typically prevent employee stock options from being cashed for six months after the lock up period.

Facebook now have 800 million members and with a revenue of $1.6 billion in the first half of 2011 when the company goes public who knows what will be achieved.   Employing over 3,000 employees Facebook is a force to be reckoned with and one that is here to stay.

Responding to the launch of Facebook’s IPO process, and the decision by Mark Zuckerberg and his allies to retain an iron grip on the company, Professor of Global Innovation at Cass Business School, Ajay Bhalla, said:

“Research shows that when founder-led firms go for IPO listing they often carry ‘founder premium’, especially when the founder opts for maintaining control rather than diluting it.

“This means that by maintaining control Zuckerberg sends a clear signal to stakeholders, investors and customers that the company will retain a consistent strategic focus.”

“Zuckerberg is following in the footsteps of charismatic founders such as Jobs, Gates, Brin and Page who, by retaining control, were able to direct their vision without much interference from other majority shareholders.”

“As the firm continues to evolve from being a network player to one which can make in-roads into diverse segments, such as mobility and enterprise, Zuckerberg's control over the firm will continue to generate interest and send reputation signals which are likely to generate greater shareholder wealth than would otherwise be the case.”

Ajay Bhalla is Full Professor of Global Innovation Management in the Faculty of Management at Cass Business School (http://www.cass.city.ac.uk/), where he teaches PhD students (http://www.cass.city.ac.uk/courses/phd).

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Cass Business School (http://www.cass.city.ac.uk/), is one of Europe’s leading providers of business and management education, consultancy and research.