Mpls.-Based IT Firm IVDesk Poised to Go Public
A Minneapolis-based IT firm recently announced that it plans to go public through a direct public offering (DPO), a less expensive alternative to an initial public offering (IPO) and one that is most commonly used by smaller companies.
IVDesk, a 12-year-old company that provides outsourced IT solutions to small and mid-sized businesses, said that it will maintain its Minneapolis headquarters following the DPO.
CEO Bill Sorenson told Twin Cities Business on Monday that the DPO process began with an initial round of financing that closed in mid-September and will be used to expand the company’s sales, marketing, and customer support resources. Investors involved in the initial round are now stockholders in IVDesk, which intends to complete its DPO through a second round of financing in early 2013, when the company will file a public registration statement with the U.S. Securities and Exchange Commission (SEC), Sorenson said.
IVDesk’s services include hosting customers’ desktop and application services, 24-hour helpdesk support, and backup and disaster recovery solutions. Sorenson said the company has seen “a huge demand for its services over the last 24 months,” as small and mid-sized companies have opted for IVDesk’s services—for which users are charged a monthly fee to have their data and applications hosted—rather than purchasing expensive equipment for their offices, Sorenson said.
IVDesk currently has 16 employees, and it plans to add at least 30 more over the next year, he added.
Sorenson declined to disclose the amount of money that IVDesk hopes to raise through its DPO, saying that the details will be included in regulatory filings next year. He also declined to disclose the company’s annual revenue.
Larry Ingwersen, an IVDesk board member who introduced the company to the DPO concept and who has worked on similar offerings for other companies, told Twin Cities Business that the method is more common on the east and west coasts but is less commonly practiced in the Midwest.
DPOs are less expensive than IPOs because they involve offering shares directly to the public without the assistance of an investment bank. In addition, there are no sales or profit requirements for filing a DPO, although IVDesk does generate revenue, Ingwersen said.
IVDesk’s stock will be traded via the “over-the-counter” market, rather than on a major stock exchange like the NASDAQ or the New York Stock Exchange. Trades can be conducted electronically, and the company is subject to the same reporting standards as larger public companies trading on major exchanges, Ingwersen said. The company has not yet been assigned an official trading symbol.
IVDesk’s move comes at a time when traditional IPOs remain scarce in Minnesota; only two locally based companies have completed IPOs so far this year. Maple Plain–based Proto Labs completed its IPO in February. Eden Prairie-based medical device firm Osprey Medical, meanwhile, went public in April through an IPO in Australia.
However, the Tile Shop, LLC, a Plymouth-based retailer of manufactured and natural stone tiles, said in June that it would merge with a shell company in a move to go public.
In 2011, two Minnesota companies completed IPOs: Plymouth-based Kips Bay Medical raised $16.5 million in its February 2011 IPO, and Tornier, an Amsterdam-based medical device company whose U.S. headquarters are in Edina, raised $166 million in an IPO the same month.
Eden Prairie–based Bluestem Brands also filed to go public in 2011, looking to raise about $150 million, but later postponed for undisclosed reasons. In November 2011, Plymouth-based BioAmber, Inc., indicated in a regulatory filing that it planned to go public, but the company hasn’t completed an IPO either.
The two IPOs in 2011 matched 2010 and outpaced 2009, when there was only one, and 2008, when there were none.