As the market rejects 2000's initial public offerings, many companies may be forced to go private again, and companies that spun off unprofitable businesses may be forced to eat their young.
Delia's (Nasdaq: DLIA) was forced to take iTurf back into the nest when its stock began to suffer. Then, days after completing the reverse merger, it decided to discontinue the company's operations.
Seagate Technology also announced plans to go private in March. The deal, valued at about $20 billion, included the sale of its stake of Veritas Software (Nasdaq: VRTS) back to the company, and a private investment group led by Silver Lake Partners. Seagate said the move would allow it to move at a pace dictated by its own comfort level, not by the quarterly pressures of Wall Street.
The number of LBOs, or leveraged buyouts, has also been on the rise in 2000, a trend that may indicate more companies going private in 2001, analysts said.
"This is the best year since 1989 for public companies going private," said Richard Peterson of Thompson Financial Securities Data; there was $29 billion in activity from 66 deals, the highest amount since 1989, and the biggest number of deals since 1988. It was also the best year for tech LBOs, with 10 deals worth $3 billion, Peterson said.
• The Year Ahead: IPOs look for second half rebound in 2001>