Company goes public, I go...?

April 1, 2009 2:01 PM

What will it mean for me if my new company goes public?

I've just recently started work at an interesting positioning firm. My boss mentioned in passing today that he's planning to take the company public once the economy makes an upswing. Assuming I'm still working here when this happens, what will "going public" mean for me? What type of package should I negotiate for in order to be in the best position when this does happen?

posted by anonymous to work & money (7 comments total)

Do you have stock options or stock in the company? If so, those will become liquid. Otherwise, not much changes. I have worked in both private and public companies as well as a private company that got bought by a public company and if you're not a company officer or the CFO there's no real difference. The largest impact will be on the accounting dept and on people who manage things like compliance with things like Sarbanes-Oxley.

If you want to try to make some hay of it, get stock or stock options now. It will be an order of magnitude cheaper and a lot easier to get now versus once the company is public.
posted by GuyZero at 2:08 PM on April 1

Public companies are, by law, required to make as much money for the stockholders as possible, which can lead to bad situations. It may not necessarily happen if the original owner is still in control, it may not happen, but it's something to keep in mind.
posted by destro at 2:37 PM on April 1

Once you hear the term "increase shareholder value," that's your cue to leave. It means extra accountability, no perks, and the gradual erosion of everything that makes working somewhere enjoyable. It means a beancounter is in charge and the company exists solely to feed earning projections for the next quarter.

Hopefully you got enough stock options to make working there worthwhile, otherwise cut your losses and get out before it kills you.
posted by mikesch at 2:42 PM on April 1 [1 favorite]

If you lack stock options when the company goes public the event will mean a little party for everybody on opening day, then not much.

Even if you do have options you will likely be locked out of selling them for at least six months during which time you may see the value of said options drop (or rise!) significantly.

I went through this in 2000 and saw my options shoot up to $.5 million (if I had been fully vested) on the first day only to dwindle to next to nothing over the next couple of years.
posted by trinity8-director at 3:46 PM on April 1

Also, FWIW, no one goes public these days for shits and giggles. Does you company have well over $25M in annual revenue, preferably over $100M? Sorry to be kind of a jerk here, but if you report directly to the owner of the company and you don't know what's involved in an IPO, the company isn't going public. Companies that go public have VPs, multiple levels of reporting hierarchy, all the corporate shit. Unless you use "my boss" in a more general way as opposed to him directly supervising you. Does your boss have a plan for what to do with the $50M-$500M he's going to raise?

I mean, maybe it's totally plausible, obviously I don't know anything about your job, but an IPO isn't some that typically gets mentioned "in passing". It's kind of a big deal.

FWIW, here's a list of Q1 2009 IPO filings in the USA. There are links to previous quarters' filings. See if those companies seem to compare in terms of size to yours.
posted by GuyZero at 4:18 PM on April 1

I worked for two large companies that went public. Biggest mistake both companies ever made. The amount of compliance and accounting that is required is staggering and draining to the entire company. Both were forced to create layers of management and a bureaucracy that was stifling. The owners did get rich, but I am not sure they would do it again. I am sure there are many good reasons to do so. I just did not experience them.
posted by JohnnyGunn at 8:36 PM on April 1

SOX and other regulatory layers have crippled public companies in recent years, and it's only getting worse. If your boss is still operating a company where you're rank-and-file and you're talking to him "in passing" and report directly to him, he's completely clueless about what it means to go public and what it will mean for the structure and operations of the company when he does so.

To answer your question: The day he announces FIRM plans to go public, make sure he's not full of crap, find a way to cash in, and then get out. You don't want to be part of a public company with a fool at the helm.
posted by SpecialK at 9:26 PM on April 1