Companies Planning IPOs That You Should Invest In
An IPO is the quintessential investment opportunity to capitalize on the ‘Buy low, sell high’ mantra.
Any investor, broker or third-grader at Toys-R-Us will tell you that identifying sound investments in today’s volatile market is about as easy as configuring Facebook privacy settings.
An IPO, though, can be the ultimate investment, as the initial public offering valuation can prove to be the cheapest a stock will ever be. Google, anyone? Caution: the IPO valuation could be significantly higher, as was the case for many in 2010.
With last year’s glut of overvalued IPOs still fresh in investors’ minds, companies eyeing 2011 for an IPO have been forced to lower valuations. As a result, investments in a 2011 IPO may yield the golden ‘Buy low, sell high’ investment.
Linda Killian, C.F.A., is the founder and principal of Renaissance Capital, a global IPO research and IPO investment services firm based in Greenwich, Conn. Killian sees the 2011 IPO investment calendar light on big splash IPOs compared to last year, which could drive down IPO valuations.
Spoiler alert: When Facebook does go public, investors will go crazy for a slice of the Silicon Valley golden child and the Facebook IPO will be inflated.
“The deluge of deals from China in the fourth quarter surprised many, and many not-ready-for-primetime companies managed to find underwriters,” says Killian. “Investors have been chastened by the poor performances and will be picky.”
Picky investors, low IPO valuations and positive market indicators signal a potentially lucrative 2011 investment year. While there won’t be a GM or Agriculture Bank of China size IPO, the chance to own a recognizable brand is on the horizon. Investors will most likely have to wait to 2012 for Facebook, but in the near term investors can expect to see these IPOs:
Rumored to go forward in the first quarter, the Toys-R-Us IPO is estimated at $800 million, but that number may be lowered. Speculation has followed the Company since last summer and will continue until an announcement is made. Toy-R-Us has resurrected itself in the last few years, but leery investors still point to online competition and executive turnover as question marks.
The popular and successful GM IPO last year may speed up the US Government’s desire to put Chrysler in the hands of investors. Sergio Marchionne, who also heads Fiat, put a 2011 target date on the IPO last year. Chrysler plans an all-electric Fiat 500 for the US market in 2012, which could excite or stymie investors’ attitudes.
One of the more interesting IPOs of 2011, travel search site aggregator Kayak may benefit for the social media and technology love affair that has swept the world. Kayak, which like Expedia and Orbitz, takes a commission on sales for airlines, hotels, car rentals, vacations and more. The business model is under threat as American Airlines recently cut out Expedia to drive web traffic to its own website. If other companies follow suit, Kayak may be booking a one-way flight to broke.
Nielsen Holdings BV
Private equity firms promise to dominate the 2011 IPO landscape, and Nielsen Holdings BV headlines the class. The television ratings and consumer research company was acquired for nearly $10 billion in 2006 by a large group of private equity. Nielsen Holdings BV anticipates raising close to $2 billion, but they may want to run a survey and see if investors strongly agree, moderately agree or disagree with that goal.
GNC Acquisition Holdings
Currently owned by the Ontario Teachers’ Pension Plan, GNC Acquisition Holdings again will try to bulk up its capital with a 2011 IPO. GNC has tried twice to date, albeit with a different ownership group. The retail supplement chain has posted improved financials since its last attempt. Should the vitamin superstore flex its muscles at the right time, the investment could be attractive.
AIG (American International Group)
Too soon? It might just be for the lightening rod of the global financial crisis. If the US Government does proceed with an AIG IPO, it may be the largest of 2011 and rival the largest ever, putting it in a class with GM and Visa (and Facebook when it comes). Wouldn’t it be ironic for the focal point of the Great Recession to actually bolster the markets?
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.