By Heather Somerville
SAN FRANCISCO (Reuters) - The much anticipated initial public offering from Silicon Valley payments company Square could take a price hit if its chief executive, Jack Dorsey, takes a second and possibly more demanding job: running Twitter.
A distracted CEO juggling two companies, neither of which is a well-oiled machine, may not inspire the investor enthusiasm Square had bet on, financial industry experts told Reuters.
"Management and management focus are the single most determining factor of the success or lack thereof of a company pursuing an IPO," said Lise Buyer, an IPO consultant with Class V Group in Silicon Valley who also helped guide Google Inc's IPO.
"Were I a (Square) investor, I would want to be compensated for the cost of a part-time CEO who already had a full plate. And by compensated I mean I would expect a lower valuation."
Square was valued at $6 billion at its last funding round a year ago. The company has filed a confidential public offering and plans an "imminent" public filing, according to a source familiar with the situation, potentially putting it in a position to be a public company by the end-of-year holiday season.
There is no indication yet how Square might price shares. And the company could still push back the IPO, as the market's volatility provides an easy cover for any delay.
This IPO would affect more than just Square. A blockbuster debut from Square could rejuvenate the sluggish IPO market, which is down 35 percent over last year in terms of number of deals priced, according to IPO manager Renaissance Capital.
Concerns about slowing growth in China and an interest rate hike in the United States by the Federal Reserve helped make the third quarter the worst since 2012, with IPO proceeds plummeting 77 percent compared with the same period a year ago.
“If Square went out and did well that would encourage people generally to go out,” said Eric Jensen, an IPO attorney and partner at law firm Cooley.
But if it prices low and performs poorly on the stock market, he said, other tech companies in the queue will have a tougher time finding buyers.
DEMANDS ON DORSEY GROW
Still, Dorsey, a Twitter co-founder who took over as interim CEO in June, has been lauded for his work guiding both companies over the last four months. He has pleased many Twitter shareholders, while Square has launched new products and its IPO plans have chugged along.
“I don't think anybody has had a good experience betting against Jack Dorsey," said Fritz Lanman, an early Square investor and tech entrepreneur.