Why Oura walked away from a $15bn IPO (and why it's relevant to you).

Here's a little tale about a company I once knew reasonably well, and what I think might be the real reasons it walked away from a potential $15.62 billion IPO a few weeks ago.

Oura is the global market leader for smart rings that track your sleep and a host of other health markers. Valuation at last fundraise: $11bn.

I started wearing an Oura ring in 2018 - around the time I met the then CEO, and loosely knew one of the co-founders - and it was permanently on my finger from then until around 3 months ago.

Back in 2018, outside biohacker and wellness tech circles, almost nobody knew what a smart ring was.

Fast forward 8 years... a few weeks ago my 70-year-old neighbour asked my wife, "Is that an Oura ring on your finger?"

Wellness has gone mainstream. A load if weird stuff I (and probably you) were doing a decade ago is now perfectly normal - and, being a little cynical, some of it has become a class or status symbol.

I don't love that part. But it is what it is.

Anyway, back to Oura.

They were all set to go public at a valuation of up to $15.62 billion.

Then, just days before the IPO, they shelved the whole thing.

The official reason, according to CEO Tom Hale?

"Uncertainty in the IPO market."

Maybe. But I think there's more to the story.

For a start, Oura isn't exactly a struggling business.

It's profitable, expects revenues to grow by around 90% this year, and has millions of paying subscribers.

And according to reports, there was plenty of investor demand for the IPO.

So why did they pull it?

Let's follow the money.

The IPO filings reveal something interesting.

Almost three-quarters of the shares being offered weren't new shares being issued to raise money for Oura.

They were existing shares being sold by current investors who wanted to cash out.

One of those investors, Forerunner Ventures, was planning to sell its entire 9.3% stake to net approximately $1.2 billion.

Meanwhile, Oura itself expected to receive around $533 million from the IPO, almost all of which was earmarked for tax obligations relating to employee shares.

So this wasn't a conventional IPO designed primarily to raise fresh capital for growth.

At the midpoint of the proposed price range, Oura would have been left with just $6m after covering employee-related tax obligations.

And here's where it gets interesting.

Reports suggested there was plenty of investor demand, but the shares were heading towards the bottom of the proposed price range.

At a lower price, Oura would have raised even less, while existing shareholders would have received substantially less than they were hoping for.

My read is the IPO was becoming a less attractive deal for the people selling, without delivering much fresh capital for the business itself.

That's quite a different story from just citing uncertainty in the IPO market.

Now, I don't know what happened behind closed doors, and market uncertainty almost certainly played a part.

But this is something I've seen repeatedly in the world of buying and selling private companies.

A good business doesn't automatically make for a good deal.

There are multiple parties involved, often with very different motivations.

The founder might want to take some money off the table.

An early investor might be under pressure to return capital to their own investors.

Management might want to keep growing (and not get a new boss).

As for the buyer... they want to acquire a business at a price and on terms that make sense for them.

Everyone can agree that the business is excellent and still fail to agree on a transaction.

Which brings me to the part of this story I find most interesting.

Oura CEO Tom Hale said:

"We have the luxury of choosing our moment."

That word, luxury, is doing a lot of work.

Because whether you're running a £1m business or a multibillion-dollar one, your negotiating position changes dramatically when you don't need a deal to happen.

And here's the most important point - as you know, you don't suddenly acquire that negotiating power when someone makes you an offer.

It's often determined by decisions you've made years earlier.

How you've financed the business. How much cash you've taken off the table along the way. Who's on your cap table, and what those shareholders expect from you.

Oura is an interesting example because the company might be perfectly happy to wait another year or longer. But an investor who was expecting to realise $1.2 billion might have a rather different view.

Same business.
Same transaction.
Very different incentives.

The lesson I want you to take from this is not that you should be prepared to walk away from a deal. That's an obvious advantage for anyone who can.

It's that the decisions you make while building your business can determine how much freedom you actually have when the opportunity to sell comes along.

And by then, some of those decisions can be very difficult to undo.

I'll watch with interest to see if or when Oura come back to the table.

And I hope that if or when your time comes, you've given yourself the same freedom to choose.

Two things I want you to know about...

1. Free live workshop - Tuesday, 27 October

I'm joining Damien H. Weinstein, Founder of law firm Weinstein + Klein, for a live workshop, as part of exploring the theme: How Founders Get Screwed Selling Their Companies (and How To Make Sure You Don't).

First, in around 20 minutes we'll cover how to navigate the M&A world, when not to hire an M&A advisor, and some of the costly traps hidden in advisory agreements.

Then Damien and I will be on hand for an extended Q&A where you can ask us anything on this topic or whatever's on your mind.

Tuesday 27 October, 2:30pm UK / 10:30am Eastern USA.

2. I've launched a new weekly email, The Exit Literacy™ Brief

If you're interested in maybe selling your business one day (or creating more freedom in or from it today), I've started a separate weekly email specifically for you.

It's where I'll share practical lessons from real transactions, candid perspectives on what's happening in M&A (like the Oura take above), and the mistakes that can cost founders dearly - including things you can address years ahead that will help you build a better, more valuable business that's better to own today.

I'll still talk about entrepreneurship here, but the more technical M&A stuff will mostly live there.

The aim is to help you become a significantly more informed business owner, with practical benefits today - whether you're planning to sell next year, in 5 years, or never.