Ovum approaches its IPO

Earlier this week Ovum’s shareholders (of whom I probably have the smallest holding) voted to move ahead with the plans to IPO. It’s been interesting to hear opinions, both from those who are informed and from those who are guessing.

Some things are clear: Ovum is growing at 25% and is increasingly profitable. The rumours that Ovum has cancelled recruiting in advance of IPO are clearly laughable: Ovum has recruited six analysts in last six weeks, 25 this year: and 14 more roles are currently advertised. Many recruits come from competitors, so these are clearly highly qualified.

Partly as a result of growth, Ovum is a very different place to what it was a few years ago; the change will continue. Let us also not forget that IPOs are called ‘exit opportunities’ in the trade, and it’s only right and fair that some people with leave the firm. For co-founder Julian Hewitt, there’s been a long and careful transition out of the business which clients and staff have known of long in advance. He’s been on a well-deserved sabbatical for much of the past year. He will be joining a family-owned property development company and, we understand, will remain chair of Ovum’s alumni association.

Ovum has always had a share trading culture and many, if not most, staff have some shares. It will be interesting to see what happen to the share price. If some shareholders want to sell some shares post-IPO then good luck to them. Of course the IPO also exists to fund future growth, and more shares will be created to meet the demand from new investors that the IPO taps into. This extra supply will probably depress the share price. For the key staff who were awarded discounted options, there is still money to be made. Folk like me, who bought at the internal market price, have less certainty of a fast reward.

For the next few weeks Ovum’s directors will be, I expect, feteing the investment community. When things have cooled down, I’m looking forward to meeting up with CEO Chris Dines. I’m eager to hear what questions readers would pose to Chris, but here are three to start with.

  • Mergers? The IPO will allow Ovum to do further acquisitions: why has it ruled out mergers.
  • Spin-outs? Ovum, like other firms, keeps building specialist teams in the business. Will it develop these as separate brands, as IDC is going, which spin-out opportunities?
  • Incentives? How will remuneration and incentives change? IPO experiences tend to focus staff on financial rewards – and not only in the form of stock. I find it surprising how many people apply to join Ovum from competitors; I have heard suggestions that Ovum could be overpaying some new hires. However, financial incentives do not always attract loyal staff, and can accelerate staff turnover. Without the IPO’s stock opportunities, how will Ovum incent staff, and what can they do to develop the sort of non-financial motivators that Ovum was known for in the 1990s?

P.S. Ovum watchers should know that the six latest hires are:

  • US: David Dunphy, OvumRHK Research Director
  • UK: Peter Clarke, SITS Principal Analyst; Aleksandra Bosnjak, Telecoms Content & Media Analyst; Jonathan Coham, Telecoms Analyst.
  • Australia: David Kennedy, Telecoms/SITS Senior Analyst
  • Korea: Sang Yun Han, Telecoms Research Analyst.

P.P.S. More on Ovum’s hiring is online at CRMBuyer.

0.00 avg. rating (0% score) - 0 votes