If you find that informal networking is useless, you should sample some formal mentor-protégé matchmaking programs. Peggy O'Connor, president of Executive Services, a placement firm in Chicago, found her mentor through the state's Women's Business Development Center (312-853-3477). "I was struggling for the first couple of years, and then I found someone to share my feelings of isolation," she says. Barbara Kurowski, owner of Best Messenger Service, a courier company in Willowbrook, Ill., enrolled in the organization so she could aid another small-company owner. "Even though we're in completely different industries, the basics of decision making apply to any business," reasons Kurowski. "Any steps I can save her will keep her ahead of the competition."
To get more information about local mentoring programs, contact your state's minority-business-development agency as well as local small-business-development centers and other educational and matchmaking programs such as those offered by the Women's Opportunities Resource Center (WORC; 215-564-5500). Don't let the name fool you; WORC welcomes men, too. You might also join the National Minority Business Council (212-573-2385; annual membership is $275), which offers matchmaking services and support to its 375 members nationwide.
For more mentor-finding tactics, check out some other publications. Author Kram likes Michael Zey's The Mentor Connection (Transaction Publishers, 908-932-2280, 1991, $19.95). Johnson recommends Think and Grow Rich: A Black Choice (Ballantine, 1991, $5.99), by Dennis Kimbro and Napoleon Hill. It addresses the issues involved in getting ahead as a minority business owner.
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Prepping for IPOs
We're thinking about taking our company public and want to learn more about initial public offerings before we approach bankers and lawyers. What are we in for?
Name Withheld
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Investment bankers are looking for a good company story, which usually involves a fast growth rate (and a market to support it), profitability, and a plan to uphold consistent performance. "If you're a $20-million company, show that you can go to $100 million in five years," says Peter Gotcher, CEO of Digidesign, a company in Menlo Park, Calif., that designs and makes recording systems.
If you find such demands disconcerting, you should figure out what you really want to get out of going public. Assess your willingness to surrender control of the company. (For more on life after an IPO, see "The First Day of the Rest of Your Life," May 1993, [Article link].) And test other sources of capital, if need be.
Still interested? A preliminary step is to get your books in order. "Lay the groundwork now by starting to manage as a public company," advises Gotcher, who adds that investment bankers will want to see at least three years' worth of audited financial results.
The financier best suited to represent you is the one that doesn't buckle under the pressure of your cross-examination. Mark Cohn, chairman of Damark International, a Minneapolis direct marketer of brand-name merchandise, suggests grilling bankers on the following: What is the quality of their research coverage? What are their market-making capabilities? Can they get the transaction done? How much support will they provide once the deal is complete?
After nearly a year of research, which included multiple interviews with more than 18 banks, Cohn and his board chose 3 banks to take Damark public. One was a "hot hand at getting out IPOs." Another had substantial financial capabilities and a good reputation for its research coverage. The third was a nearby regional bank that would be able to get the surrounding community to gobble up the stock. That mix of expertise was so successful that Damark did a secondary offering 18 months after its IPO.
But you don't need Wall Street's best and brightest to take your company public. There are plenty of brokers who will do multimillion-dollar deals for small players. To find out more, call Regional Investment Brokers (708-433-5800), a national group of dealers in Highland Park, Ill. The group creates informal networks of small, independent brokers that can market your offering for you.
If you decide to sell ownership via a full-blown IPO or a small equity offering, you should expect to spend 60% to 70% of those first six months doing paperwork. "You'll need to show everything from detailed purchase orders to receivables and payables, full audits, and all requisitions," says Alan Freidman, CEO of Encon, an energy-service company in Hopkinton, Mass. (See "Doing a Small Offering," Banking and Capital, February 1993, [Article link].) Since your new life will be dominated by meetings, "make sure you have a strong management team in place, because you'll be totally absorbed in the process," says Gotcher.
For more general information, you should collect free handbooks on going public from major accounting firms. It's also a good idea to read Going Public (HarperCollins, 1992, $11), by Michael Malone and Edward Burlingame. And Buck Goldstein, chairman of Information America, an on-line database-research firm based in Atlanta, suggests attending seminars held by investment banks to get advice from knowledgeable people. "There are experts on the panel who have personally gone through the motions and have taken their companies public," he says.
-- Reported by Karen E. Carney and Vera B. Gibbons. n
