Stock is usually the currency of choice in most mergers, and the stock prices of most technology companies have been beaten down by poor earnings and skittish investors. Meanwhile, the IPO market has all but dried up, spooking venture investors and making for an extremely difficult market in which to raise capital. It's been a tough market because cash has become precious. Companies are retrenching and inspecting their own business models for flaws, while at the same time focusing on growing their revenues in response to investors that are demanding profits. They've been told that market share is no longer important and that profits are everything, so a lot of bigger companies are stepping back and focusing on their core business.
Profits are now the litmus test investment bankers are using to take companies public.
Money-bleeding organizations that raised venture capital 12 to 18 months ago, under the pretense of going public in the first or second quarter of 2001, are now running out of money. Cash-starved companies are finding a deaf ear in the venture capital community. Venture capital investors have become more selective in their investments, reserving more cash for follow-on investments in more promising portfolio companies. ECharge Inc., a promising Seattle-based online payment firm that laid off the majority of its staff a few weeks ago when it failed to score its third round of financing, is one of those companies. I'm evaluating all the options.