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The US stock market has seen a tumultuous wave of IPOs in recent years, reflecting both the opportunities and challenges in the broader financial landscape. A record 480 IPOs were filed in 2020, an impressive 106.9% more than the previous year and 20% more than the previous record set in 2000. The record was broken again in 2021, with a staggering 1,035 IPOs, an increase of 120 .4%. However, the surge was met with a dramatic drop in 2022 as the market cooled to 181 IPOs, down 82.5% year over year. As of August 21, 2023, the current number stands at 104 IPOs, down 27.3% from the same point in 2022. These figures underscore the dynamic and often unpredictable nature of the IPO landscape and indicate a complex interplay of economics, regulation and market forces that continue to shape investment opportunities in the technology sector in the United States.
Big IPOs lined up in 2024 include names like ARM, Stripe, Klarna, Reddit and Databricks, with Databricks and ARM attracting significant media attention due to their size and the fact that both companies are at the epicenter of the craze Industry around AI, data platforms and semiconductors.
Another major IPO is hard to spot
Back on February 17, 2023, KKR-backed BMC Software confidentially filed for an IPO, and according to Google News, the market coverage needed to be more comprehensive, with just 16 news articles. While the trade press is moody even at the best of times, this scant coverage doesn’t do BMC justice.
BMC is an industry fixture with a rich history spanning the past four decades. Still, this IPO has yet to catch the attention of industry commentators looking ahead to what 2024 will bring to the IPO landscape.
BMC Software, a Houston-based provider of IT infrastructure and operations services software, has strong leadership positions in its markets, a loyal customer base and a growing new logo business. The path to an IPO in 2024 was obvious to those watching the company. In 2018, private equity giant KKR & Co. (KKR.N) acquired BMC for $8.5 billion, including debt. Bain Capital previously owned the company. Private equity firms are looking for a positive exit, and KKR will look to maximize its returns to bring BMC to market in 2024.
With a strong history of innovation, the company is evolving both organically and through a series of acquisitions including Integrity Solutions, Remedy Software, Compuware Corporation and most recently Model9. BMC claims 86% of the Forbes Global 50 as customers and is focused on expanding cloud-based offerings, most notably the 2020 launch of the SaaS-based BMC Helix Control-M application workflow orchestration platform, which has been recognized as an industry leader according to Forrester’s AIOps Wave is a testament to its adaptability and market position with its AIOps offering. BMC Software recently reported sales of an impressive $2.4 billion. This financial strength is reflected in the sizeable workforce, currently over 6,000 employees, reflecting the company’s commitment to growth and innovation.
How to appreciate BMC
When you compare BMC’s $15 billion projected market valuation to that of its public market competitors, that potential listing number seems small to me. See the table below.
Comparisons on BMC Software’s public market.
Steven Dickens – Personal Analysis
All data is as of August 21 and headcount is based on LinkedIn data.
While BMC Software is positioned smaller than ServiceNow and has a more defined focus on IT infrastructure and operations, it closely aligns in size with competitors such as Splunk, Dynatrace and Datadog. Disregarding Datadog’s atypical 23x sales multiple as an outlier, the industry standard appears to be settling at an average 8.6x sales-to-market cap multiple. When this metric is applied to BMC’s latest revenue figures, the resulting projection is for the company’s market cap to be an estimated $20.64 billion. This analysis underscores BMC’s position as a major player in this space, comparing it to other industry giants and providing insight into the company’s potential market valuation.
looking ahead
As the US navigates a confusing macroeconomic landscape in 2023, the Federal Reserve finds itself at a crossroads. With the Jackson Hole meeting looming later this month, Wall Street and financial watchers from across the spectrum are anxiously awaiting insights that could chart the way forward. With recent predictions of a looming recession, the main concern is whether the country’s economy will make a soft landing or experience a more turbulent downturn.
Against this background, the IPO market follows. With a slew of big tech IPOs lined up for 2024, many will bet on headline-grabbing companies like Databricks and Stripe, but doing so would require a proven, profitable company with a strong position in high-growth markets such as India. B. ignores service management and observability.
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I am Vice President and Practice Head at Futurum Group with extensive experience at IBM, HPE and Broadcom. My focus is on conducting research, analyzing market trends and providing valuable insights for top companies in areas such as digital transformation, disruption, innovation and hybrid cloud technology deployment. Bridging the gap between technology and human elements, I address the grand challenges organizations face. My passion is helping organizations grow, scale and adapt in a rapidly changing landscape. I share insights on podcasts and on reputable platforms like Forbes and Futurum’s Network to equip clients with knowledge and strategies to innovate and outperform their competition. With a deep understanding of the industry, I enable companies to master the challenges of the digital age and use new technologies for success.
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