Yext’s well-managed IPO was exciting for the local industry, and will be great for the company. Three market days after the Thursday event — Monday afternoon — it sits above $13.90, up from $11 out of the gate.
The money’s great. But there will be other plusses. The IPO establishes a clear valuation and gives the company new resources for acquisitions – cash and/or stock. It will also help with executive recruitment, and tech and business development.
It also wins Yext the highest profile in automation/geotargeting, which CEO Howard Lerman asserts is a “winner take all market.” Given that platform companies like Yext are coming from so many directions (websites, advertising, reviews, payments), I don’t know about that (!) But this week, we’ll give him the benefit of the doubt.
Rival companies will give Lerman some leeway, too. One of the phenomenons associated with IPOs is that the rivals hope to cash in on the validation of the successful IPO when it is their turn at bat (i.e. Trulia following Zillow in 2014.) Some companies, of course, never get out the door after a weak IPO (i.e. Living Social after Groupon in 2011; Web Visible after ReachLocal in 2010).
Yext is going to have to deal with being a public company and the added pressure for disclosure/positioning, profitability and constant growth. In some cases, the window dressing proves to be a disaster, causing misplaced spending on results, and hurting a company’s organic innovation. But we’ll see. Some companies, like Autotrader and Yodle, spend years moving towards an IPO, but for various reasons, never get there.
Local Onliner’s Honor Role of Local IPOs
• Endurance International Group
• Angie’s List
• Constant Contact
• Internet Brands