Welcome to Hamburger Evron & Co.’s High-Tech blog - IPO Walk Through.
I am excited to launch this blog, especially because of the great value that accompanies it. Through the blog, I will attempt to offer a special and personal reading experience, which will provide a glimpse into the depths of one of the most fascinating fields of Israeli companies - the NASDAQ (www.nasdaq.com) initial public offering (IPO) process in the United States.
The blog will provide you with a first-hand glance into the IPO process of an Israeli technology company, accompanied and consulted by the High Tech Dept. of our firm.
Before we dive into the IPO process - probably one of the most significant steps for a company - we must first understand our work environment and resources, as well as target the question of why we choose to operate specifically there, rather than other trade arenas.
What is the NASDAQ Stock Exchange?
NASDAQ (National Association of Securities Dealers Automated Quotations) is a securities stock exchange that operates from New York City, while holding numerous other branches, and is in direct communication with other stock exchanges around the world.
The NASDAQ stock exchange’s main feature, which distinguished it from its competitors, was that it was completely computerized, and its inner trading occurred online instead of being a physical trading arena like the others.
Since its establishment in 1971, NASDAQ has succeeded in becoming one of the most attractive trading arenas for companies interested in issuing their stocks to the public, and raising great amounts of funds, due to a few main reasons:
First, NASDAQ was new and transparent, allowing people to receive a clearer picture regarding the price of stocks on the market and the differences between their buying and selling prices.
Second, the admission requirements set by NASDAQ for those wishing to trade their stocks were lower than the New York Stock Exchange, an important factor even today.
Third, NASDAQ, as opposed to its competitors, gained its name and reputation by successful marketing strategies, and makes sure to continuously advertise the success of different companies in raising money as part of the trading arena that it offers.
A good example is “Intel”- back then, a small, young company in its early stages, "Intel" issued its stocks to the public during NASDAQ's first year of establishment, and raised 6.8 million dollars - an unbelievable amount of money in comparison to other companies at the time.
As a result of Intel’s success, along with other factors, the NASDAQ stock exchange became the central trading center in the world for high-tech and technology companies interested in issuing their stocks to the public.
When it comes to Israeli companies, the decision of issuing stocks on NASDAQ cannot be taken for granted.
Israel holds a diverse and lively stock market. In order to understand the process inside and out, we must outline the prominent reasons an Israeli company would renounce the issuing of its stocks In the Tel Aviv Stock Exchange.
Regulation - the Israeli stock exchange operates under heavy regulation, some may say too heavy. This makes the Israeli stock market less attractive for companies in general, especially technology companies attempting to raise large amounts of money for development and research.
Potential Investors - the potential investor community in Israel is nearly negligible in comparison to its American equivalent. This is no one’s fault, but in a country that holds 320 million residents, the likelihood in finding a worthy investor is much higher than in Israel.
Specialties in Specific Areas - the investment community that purchases stocks on the NASDAQ stock exchange is characterized by its unique specialties in various industries. This is important because the accessibility to investors - that will properly understand the company, what it offers and will ask to support the issuing process - is much higher.
For example, the company’s IPO process which we are currently advising, is conducted along with expert underwriters, who specialize in technology companies of its' kind, and possesse a deep understanding of the market, the influential forces in it, its investment profitability and the company’s potential to produce dramatic yields to its investors.
Company Valuation and Recruitment Scope - the issue valuation of a company is calculated by specific criteria standards of the American technology market, standards that are much higher that what can be given at the Tel Aviv Stock Exchange and in accordance with a larger recruitment scope for companies.
NASDAQ holds a significant advantage in the ability to gather high-quality investors and recruitment scope, much more than would be available if the company trades its stocks on the Israeli stock exchange.
The aforementioned explanations show you that the NASDAQ stock exchange has become the most attractive trading arena not only for American technology companies, but also for Israeli companies.
In the upcoming posts, after gathering a deeper understanding about our surroundings, we will dive into the more interesting part - the beginning of a company’s IPO process, the decision making process, and the challenging and exciting legal assistance that my team and I experience.