How to Be a Public Company CEO | Hacker News Reader

How to Be a Public Company CEO

ryanallis.com

25 pointsbreck9 comments

Out of curiosity, what would this list have looked like before Sarbanes-Oxley? Everyone always says about how that made it more difficult to go public.

Not sure but he did mention that it costs a public company $2M a year in legal and other bills just for SO.

Ryan runs icontact.com -- I've heard they've been interested in going public for a while. It is interesting to hear what Ryan had to say about the process.

Perhaps their biggest competitor, Constant Contact, went public last year.

A thing I didn't quite get, under The Advantages to Being Public:

> an ability to command a higher revenue multiple than most private companies can

Can someone explain this?

Because of the greater investor/regulator financial and legal scrutiny, better access to cheap capital, and tighter regulation over who can/cannot be a director * , your company has a greater probability of long term survival. This makes it more likely that people will value your company at a greater multiple of annual earnings.

*At least in the UK.

I think he meant the ability to have higher valuation, which often is cited as a multiple of revenue, EBIDTA, etc. For instance, a publicly traded company will tend to have a higher valuation than a private one b/c it is more liquid and stockholders can cash out on some stock exchange at any time.

You hit the nail on the head. When valuing a privately held company, an investor will almost always apply a discount for lack of marketability because unlike 100 shares of stock in say IBM, for example, an investor doesn't have an easily available market to quickly sell their shares in a private company.

Funny seeing the comment from Dave Sifry. We were more or less weeks/months away from an IPO at Linuxcare, hot on the heels of Redhat and VA Linux... then, poof.

Not anytime soon. Still a great read ;)

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