In my last column, I predicted that the over-hyped Facebook initial public offering was an ominous sign for the health of equity markets. Nevertheless, Facebook and flop were not words I expected to see in the same sentence. I was wrong. Ive watched some deals backfire during my time as a Euromoney columnist: the listings of Bumi and Blackstone come to mind as well as Prudentials grandiose plan in 2010 to purchase AIA, the former Asian arm of AIG. But the Facebook IPO is one of the biggest collapsed soufflés of them all.
Teeny-bopper CEO Mark Zuckerberg will not be pleased. He is not at ease with the press: something that will have to change now that he is leading a public company. The current adverse publicity will not be going down well at the companys Menlo Park headquarters.
As for the execution of the deal, many mistakes were made by many people. Zuckerbergs decision to keep a controlling voting stake in the company is a negative. The companys decision, presumably discussed with the underwriters, to increase the size of the deal and the pricing was a mistake. And, the exchange, Nasdaq, is culpable too: initial trading was delayed and there were problems confirming orders. "I have one word for you," a capital markets expert snorted. "Inept."
The Facebook IPO was meant to be the poster child for American capitalism. Now everyone is suing everyone, which is also very American. Morgan Stanley, where I have a lot of friends, has sadly managed to pluck disaster out of the jaws of victory and has damaged its technology franchise.
Heads must roll as accountability is the essence of disciplined corporate governance. Just a thought, but which chief executive do you think had the worst May 2012? Facebooks Mark Zuckerberg, JPMorgans Jamie Dimon, Nasdaqs Bob Greifeld or Morgan Stanleys James Gorman?