Judging by my email in- box, the excitement of the moment seems entirely to concern the success or failure of the Springer Nature IPO. Not Stormy Daniels and the traumas that even money cannot take away. Not whether Theresa May can find the Alice in Wonderland magic mushroom and thus become small enough to squeeze through the crack between the floorboards called “Brexit escape route”. And least of all, will two parts of the globe ignite in local thermonuclear disaster, allowing the White House Press Secretary to claim that these problems have now been chalked up as Presidential successes, on the grounds that they no longer exist?
But for many in this industry, the Springer Nature IPO has been such a long running saga. Any company that moves out of Bertelsmann into three stages of PE ownership is going to feel some friction around re-entry into the earth’s atmosphere. All the PE company investors did well out of Springer over the years, leaving it now loaded with $3 billion in debt, some of which at least now needs to be cleared down. There has been constant date setting and cancelling since the last years of Emperor Franz Joseph (well, certainly since those of Dirk Haank). Now it just happened all over again. So what’s new?
Really very little. The IPO market in Germany is described as “soft” at the moment, though in recent months Spotify got away in Europe at $30 bn, and the markets seem to be enthused by iZettle, the point of purchase payment system. So maybe it is the story that is wrong, and which led to a $7 bn IPO to drop to a $3.2 bn part IPO, and then disappear altogether. Like the smile on the Cheshire Cat, we know it will be back, but in the meanwhile, while I am keyboard in hand, indulge me while I offer a little advice to the IM writers employed by the great firm.
"Dear Morgan Stanley and JP Morgan I really do hesitate to speak up – your all-knowingness being celebrated in all quarters – but I really did want to ask whether you thought publishing was, well, “sexy”. You see Siemens got their medical technology division away in a good IPO in Frankfurt a week or so ago and that was thought to be pretty exciting, and, as you are Global Co-Ordinators to the Deal at Springer Nature I worry that this grand company may be seen by investors not as the sexy change agent who will set the huge and valuable global research market alight, but as the No 2 player in a very solid market of have-to-have information with a long run of good Ebitda performance (admittedly down from the palmy days of the Big Deal), coping with a few hiccups in recent performance (well, you have to recognize that OA dilutes Ebitda a bit) and a long way in to the great story of digital transformation. Yes, I do know that investors have been spooked a bit by Elseviers little local difficulties in Germany. And the Digital Transformation is a bit of a puzzle when you are writing an IM – since no one who has been transformed has grown revenues over print, investors do need to be persuaded that “smaller and more profitable” is the right direction.
So all this stuff about all the journals you have and how loved they are and how once the Elsevier big deal goes through the library yours is normally next… well, that may not be where the fire is now. When you come back with the 2019 IPO, try to find a bit of real allure. Try to see if the owners can find a bit of magic dust to sprinkle – any start-up with a web address ending .ai will do. Even better, say you are starting an incubator to develop the solutions to stream scholarly articles and data directly into the workflow of scientists, and using a revolutionary twist of Blockchain to do it. Make provision for future losses – they loved Spotify. Forget about content – its getting commoditized and anyway you can get it free in Kazakhstan and your investors know it. Talk about transforming the lives of end customers. And forget all this rubbish about library requirements. In fact, forget about libraries altogether. Talk about a company that is “in the forefront of revolutionising the workflow of the bench scientist” and “materially increasing the return on the global R&D budget”.
I will not write more since I think you have my drift, and as you know this keyboard is always for hire and as a good advisor I do not wish to give away too much before I see the sums in your contract. Reflect that I may be expensive, but I am a lot cheaper than pulling IPOs! Ever your humble etc David Worlock
So you see, dear readers, this IPO thing is not for serious people like us. We are engaged in change, not in marketing If you have reached this point you may be asking why Springer Nature did not acquire Digital Science right back at the point of merger. But I only answer trivial questions about how you address investors!
Originally published on davidworlock.com On 11th May 2018