Makes a Go at the Un-IPO
Dingleflopper IV remembers the days when his upstart little venture was
beating the bushes for customers, revenue and capital. Ah, the salad
days. Before the big, proud moment when Dingleflopper Industries
executed its IPO – bringing cash into the coffers, attention from
analysts and scrutiny from the SEC.
The day the
company went big time. Curse that day, thinks Dingleflopper. That’s when
all these people started hanging around here acting like they own the
place. (Oh, right, because they do.) That’s when Carlton found himself
with a Board. Oh, he had a board before, but he actually has to listen
to this one. In fact, this one could fire him. Or it could make him fire
members of his management team. Remember when he was going to make his
brother-in-law Vice President for Organic Ventures and Development
Initiatives? Forget that.
and the stock is tanking.
decides Dingleflopper. I’m buying back my own company. And he can. And
there are lots of other Dinglefloppers doing the same thing.
Management-led buyouts in the
are happening in 2006 eight times more frequently than they did
in 2005. There are some reasons for this. For starters, private equity
firms have lots of cash and they need places to put it. Mr.
Dingleflopper has done all right as CEO of a publicly traded company,
but not so well that he can come up with the cash to buy it back all by
himself. He needs a different kind of investor, and there are plenty of
them who will be glad to get on board.
especially glad to do so if, as Dingleflopper has determined, the
company stock is undervalued. Why is it undervalued? Who’s to say? Wall
Street dumps stock when Paris Hilton gets a cat. Just because people
don’t want Dingleflopper stock doesn’t mean Dingleflopper is a flop.
no one can force the shareholders to sell. Not technically, anyway. But
if Carlton J. Dingleflopper IV doesn’t want to work for them, and he
started the company, why would Norton C. Beezbloffer Jr. want to come in
and take over? Especially if the management team is loyal to Carlton?
And who says you can find anyone unaffiliated with Mr. Dingleflopper who
would want to buy the company anyway?
The board, which works for the shareholders, could ditch Dingleflopper
and bring in Beezbloffer with a bonus. That would settle the situation!
But remember, the market gets maniacal when Rumsfeld rants and gives
France the finger. If Dingleflopper develops turmoil at the top, stock
could sink like a stone, leaving shareholders to shudder in the short
is to get while the getting is good.
Dingleflopper gets his company back, and he breathes a sigh of relief
that everything is back to normal.
for one thing. He only came out of the transaction with 10 percent
equity. Ravaging Wolf Equity Partners controls the other 90 percent, and
they got their money from individual investors – some of whom dumped
Texaco last week because they heard Cindy Sheehan had bought property in
Carlton! You’re free of the shackles that gripped
you from the day your IPO brought you all that capital. Except that
you’re never really free, because as long as you need capital, there
will be someone who has some for you – along with lots of expectations
entrepreneur who establishes a company solely for the purpose of
positioning for an IPO – and there are many – needs to be careful what
he or she wishes for. If you build, go public and get out, at least you
can go to the beach and ponder your next move.
But if you
build, go public and stay, it is possible to chase off your
shareholders. But that doesn’t mean it can ever be like it was in the
salad days. This seems to be the year when Dinglefloppers everywhere are
discovering this, to their dread.
© 2006 North Star
Writers Group. May not be republished without permission.
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