Most companies proceed willingly to the IPO altar; Applied Medical is being dragged.
The medical device company filed paperwork to sell some 6.4 million shares of its common stock on the over-the-counter Bulletin Board, saying it is being compelled by one of its main investors, Institutional Venture Partners, which wants to provide liquidity to its limited partners, according to the filing.
Company executives and board members believe the move will set the company back, and only yield nominal returns to investors.
Steve Davis, chairman of the technology companies practice at law firm Goodwin Procter, says he has closely watched start-up companies, venture capitalists and the IPO market for the past three decades and has never seen a company go public entirely at the behest of investors, with reluctant founders and board members agreeing simply because their hands are tied.
Applied Medical is a 24-year-old Southern California company with dozens of medical devices on the market, healthy revenue and hundreds of patents.
Investors in Applied Medical—including Institutional Venture Partners, Bank of America Venture Partners and a range of trusts and family offices—have not commented on the reasoning behind compelling the company to go public. The company itself has said the “quiet period” that regulators enforce around IPO registrants precludes them from commenting.