Phew! For a while there it seemed as if this section's observations on the behavior of small-company stocks might never return to its appointed task of filling in the space beneath INC.'s tabulation of initial public offerings. In 1987, the IPO list often was so lengthy that it squeezed out room for such chitchat. Not that, in the end, added commentary was needed; on October 19, 1987, the overabundance of obscure IPOs spoke for itself.
After feast comes famine: given the resultant investor skepticism, who would dare venture forth with a new issue? Yet in November, six actually did -- the most paltry number since December 1982. And only three of them are true operating companies. (Of the others, two are closed-end mutual funds investing in junk bonds, and the third is a limited partnership that manages mutual funds.)
When the cyclone struck, a pair of the brave enlistees happened to be safely ensconced in INC.'s 1987 compilation of the country's 500 fastest-growing private companies. Didn't it matter to Clean Harbors Inc. or Properties of America Inc. that the Dow Jones Industrial Average had just taken a 900-point bath? "We were ready to go, and we didn't want to chance what the future would bring," explains Clean Harbor's chief financial officer, Stephen Moynihan. Maybe so, but to flaut its flotation in the face of adversity that canceled just about every other proposed IPO, Moynihan had to concede about $4 per share and withdraw 300,000 shares from the filing's initial indications. Nothing really lost, he insists: the $9 per share that the issue finally sold at was what the Braintree, Mass., environmental-services firm had in mind anyway when its plan for going public was first cast. As it turned out, Clean Harbors could have done far better by waiting a month; by year's end, its shares had been bid up past $13. Even though the real-estate market had not been noticeably injured by the meltdown in stocks, Properties of America, a land-parceller based in Williamstown, Mass., also lowered its precrash expectations, from $7 to $5 share. Since similar shrinkage was what the majority of listed companies had just suffered, figured CFO Michael Beaudin, the discount seemed very appropriate.
The reason that Portland, Ore.'s International Yogurt Co. pushed ahead, says chief executive officer John Hanna, was that "things had been progressing so positively that delay didn't appear propitious." No wonder the signs were read as favorable: the little company had just concluded an expensive court case in which giant General Mills had complained that the former's brand, Yo Cream, sounded, looked, and was spelled mighty like its own Yocreme -- and General Mills lost. Having recently completed a production facility, capital from the public offering was to be the "last ingredient" for a national rollout of the upscale product. Nonetheless, after the crash, International Yogurt reduced its price from $5 a share to $4, and the number of shares from 600,000 to 500,000. The contraction didn't faze Hanna, one of three founding brothers. Because one effect of selling fewer shares was less dilution, he points out in cheerful hindsight, "we ended up owning more of the company."
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