Facebook ought to ditch its public offering

[Commentary] At long last Facebook has filed for its initial public offering, the most eagerly awaited event in Silicon Valley since Google went public in 2004. Having read the prospectus, with its details of how profitable and cash-rich the social networking enterprise is, may I suggest it calls the whole thing off. There is still time to cancel its IPO and the filing provides plenty of reasons why it ought to, and why Mark Zuckerberg, its founder and chief executive, would probably be happier if it did. He could carry on running Facebook as a private company and would not have to justify himself to outsiders. So what are its plans for the additional $5bn it may raise from an IPO? It intends to put the cash into US government bonds and savings accounts, and perhaps use some to pay the tax due on converting into shares the “restricted stock units” it has given to its 3,200 staff. Its sole tangible purpose for the IPO proceeds is to meet a tax obligation that will be triggered by going public. Welcome to the Catch-22 world of the venture capital liquidity event.