To IPO or Not to IPO?'s CEO Has Answers

As CEO of, with its $16.5 billion market cap, Marc Benoiff is a big fish in this corporate pond. His advice to his smaller corporate peers? Don't do what I did.

Marc Benioff, chairman and chief executive officer of Inc.
David Paul Morris | Bloomberg | Getty Images
Marc Benioff, chairman and chief executive officer of Inc.

"Why go public? I'd say to entrepreneurs, take the money. Private companies are getting extraordinary amounts of capital from all over the world. If I was able to stay private, raise huge amounts of capital, and get a good valuation, I would do that," says Benioff.

Seven years ago, went public and was given a market value of $1.1 billion, which it took happily. "Today, that would be looked at as nothing," adds Benioff.

Now, private companies generating $100 million in revenue are receiving as much as $10 billion in financing. Groupon and Zynga are examples of companies fund raising at levels not seen before.

But being a public company carries risk, and few know this better right now than Benioff himself.'sstock dropped 2.5 percent Wednesday on the news that Oracle CEO Larry Ellison cancelled Benioff as a kenote speaker at the company's recent Open World Conference.

Is this financing phenomenon seen outside Silicon Valley? The answer is no, according to countless CEOs at today's 2011 National Middle Market Summit busy bemoaning a shortage of lending. While most want to stay private, they might decide that going public would help them remain competitive.

Private companies in the US are also feeling pressure to go public in order to compete against multinationals.

"A global footprint is very attractive to companies who want one supplier. By going public, you can access public debt, purchase and aggregate smaller companies," Roger Penske, CEO of Penske Corporation, a leasing and logistics conglomerate that includes Penske Automotive, which generates annual revenues of $11 billion.

"As a public company, you have access to public equity, and the opportunity to offer stock options for your people. It's also a retention tool," Penske added.

But lately, going public for many is not even an option.

"Right now the IPO market is not there at all. In a down market, stock prices are falling, and capital is flowing out of the stock market. It's almost impossible right now to go public, with market valuations down," concludes Weiner.

The game of going public is all about getting a high valuation, and if its not on offer, there's often no reason to sell.