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CEO interest in IPOs, mergers lukewarm

Chief executives at some of the fastest-growing tech companies in North America are focusing on company operations, rather than IPOs or buyouts, a study says.

Chief executives of some of the fastest-growing technology companies in North America are focusing on operations, including overseas expansion, rather than on public offerings or buyouts, according to a Deloitte & Touche survey to be released Tuesday.

The Fast 500 CEO survey, which is made up of public and private tech companies with the fastest five-year compounded revenue growth, found that 37 percent of respondents had no plans to merge with another company or offer shares in the public market over the next 12 months.

In 2000, 27 percent of CEOs surveyed said they would seek a merger deal for their companies within 12 months. This year, that figure dropped to slightly more than 8 percent.

The figures are surprising, given the sharp decline in available funding for both public companies and private companies--even ones that are growing revenue at a brisk pace. Investors, from venture capitalists to individuals, are more interested now in profitability than a company's revenue growth.

Companies, as a result, are finding that it is more difficult to raise capital through IPOs or through secondary stock offerings.

"There aren't too many buyers out there because companies don't want to use their stock" as currency, said Phil Asmundson, an executive with Deloitte's Technology and Communications Group.

"Their prices are down, so a lot of these Fast 500 companies found it's better to get their operations in order and be prepared for when things pick up and take advantage of the situation."

Interest in IPOs has also declined. The survey found that 15 percent of CEOs last year wanted to pursue a public offering. Today, less than 10 percent say they are interested.

And while CEOs are spending less time planning IPOs or buyouts, international expansion is still an attractive opportunity for many companies.

Twenty-four percent of CEOs surveyed said they were considering expansion into China, compared with 8 percent last year for the region and all of Asia Pacific. Interest in expanding to Western Europe rose to over 23 percent this year, compared with 10 percent last year.