The Case For Remaining A Private Company: Give Me Liberty or Give Me an…IPO?
One of the most celebrated events in American business is the initial public offering (IPO). Many see it as a transforming event that ensures a company’s long-term survival, signifies an arrival into the business big leagues, and creates wealth - sometimes almost unbelievable wealth. Currently, in the U.S., there are approximately 17,000 public companies. So, why would a company actually choose to remain a private company?
By Steve Kayser
(PRWEB) August 18, 2005 -- One of the most celebrated
events in American business is the initial public offering (IPO). Many see it as
a transforming event that ensures a company’s long-term survival, signifies an
arrival into the business big leagues, and creates wealth - sometimes almost
unbelievable wealth. Currently, in the U.S., there are approximately 17,000
public companies. So, why would a company actually choose to remain a private
company?
Believe it or not, there are many good reasons not to go
public, and I offer for consideration some real-world insights that may cause
you to reconsider, or at least pause. Many people question whether or not a
private company can actually compete against a public company.
We have
been doing it for decades. Our company, Cincom Systems, is a privately held
software company that was founded in 1968. We have thousands of customers on six
continents and specialize in providing software, services, and hosting to
simplify the management of complex business processes. Cincom employs over 1,100
people worldwide and competes with companies like Oracle, SAP, Siebel, and
others.
Cincom has generated over $3.5 billion in sales and achieved 20
straight years of producing over $100 million in revenue - a feat matched only
by one other software publisher in the world, Microsoft. Throughout our 37
years, we have steadfastly remained a private company. We’ve never accepted any
form of financing from venture capitalists or other equity investors. Throughout
the history of the company, all of our financing has been through cash flow and
when necessary, debt financing through banks.
This never hurt us when
competing against our well-branded and publicly funded competitors in the
industry. In fact, it helped us to develop innovative, flexible, and adaptive
ways of thinking along with well-honed and passionately articulated value
propositions. We have continued to pioneer software innovation in our rapidly
changing business environment. Surrounded by well-financed competitors, Cincom
has an impressive list of “firsts” in the software industry. In 1984, President
Ronald Reagan hailed Cincom as “the epitome of the entrepreneurial spirit of
American business,” and we’re recognized by the prestigious Smithsonian
Institute as one of “the pioneers and builders” of the software industry.
When compiling reasons not to go public, one stands out above all the
others: freedom. Remaining a private company gives us the freedom to make
decisions based on the needs of our clients, not the demands of the
shareholders. It helps us to make bold business decisions and to create
innovation by acting on these bold decisions. We are free from excessive
regulatory burdens and free to adjust to changes in the business environment as
we see fit. By avoiding the lure of public financing, we are free to control our
own destiny.
Another clear advantage of remaining a private company is
that it is much easier to create a unique corporate culture. If you value
loyalty, a fair balance between work and family, and community involvement, then
you are free as a private company to promote and reward these values. At Cincom,
we have created a unique, family-oriented atmosphere that encourages openness
and a sense of ownership in the organization we call the “Cincommunity.” For
this reason, we have attracted an incredibly loyal and committed team, with very
low turnover. At the senior-management level, it is not unusual to have 25 years
of tenure with Cincom.
Additionally, our customers remain astoundingly
loyal because we base our decisions on customer rather than shareholder needs.
Ultimately, what has made Cincom successful is being a customer-driven
organization. As a result, we have an extremely high average tenure among our
clients, some as long as 30 years.
For almost 40 years, we have shown
that it is possible to run with “the big boys” as a private company, and we will
continue to innovate the software business for decades to come. For now, it is
clear that an IPO is a “no-go” for us.
For more information or to set up
an interview with Steve Kayser for a story, please contact Jay Wilke at
727-443-7115, ext. 223.
About Cincom:
Privately held Cincom Systems
sells both strategic enterprise software products and support capabilities for
clients looking to develop applications internally. The company competes
directly with global giants like Oracle and SAP by offering comparable products
at a fraction of the cost and deployment time. To help clients consolidate their
vendor channels, the company now offers hosting, outsourcing, and other IT
services, again at a lower price. The company’s sales network was built around
marketing partnerships, and new relationships are continually pursued. Asia is
viewed as a key growth market. ROIC has averaged 80% over the last decade while
earnings have grown 700% in five years. Management is seeking expansion
opportunities.
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Source : http://www.prweb.com/releases/2005/8/prweb273487.htm