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Thirty-one of this year's Inc. 100 -- the fastest-growing small public companies in America -- became public just last year. Next year, expect more

Nobody's suggesting that 1995 was a bad time to take your company public.

It's just that, well, let's put it this way: 1995 was no 1993. That year, 665 initial public offerings hauled in $34 billion. By comparison, 1995 saw 564 debutantes (130 fewer than the 1986 record), collecting a total of $29 billion at their coming-out balls. True, this group knew how to make the party last. According to IPO Aftermarket, 381 new issues ended the year as winners; the average gain was nearly 40%. "People get caught up in the buying craziness," says Neil Aronson, a lawyer who helps companies prepare for the public plunge. "So the initial pricing may be reasonable, but what the market does to it afterward isn't. Everyone wants to follow the crowd."

And that crowd, as it turns out, has been the real story.

While magazines like Time and Business Week struggled to coin terms to describe the handful of sudden billionaires the frenzy created -- kindergarten dropouts, high-tech burnouts, and social washouts, each and every one of them -- they hardly stopped to ponder the folks that were fueling the boom, pouring a total of $129 billion from their IRAs and 401(k)s and other investment vehicles into equity mutual funds. As unsophisticated as those investors may have been, they knew what they wanted: technology, speed, growth. It was a record year, after all, for emerging high-tech stocks, a group that raised an astounding $8.4 billion. The reason? Remember the wisdom of sage investor Peter Lynch: invest in things you understand.

Satellite TV, productivity software, cellular phones, the Internet. No matter where you lived or worked -- and for many, it was becoming harder and harder to tell which was which -- it was easy to see the benefits of hotshot technologies. Whether through faster modems or microwave clothes dryers, many of the companies among the new issues promised to make life pleasingly efficient. As much as any product those companies offered, what lured investors to their initial public offerings was the simple fact of their appetizing growth in an era during which big businesses seemed restricted to peddling one flavor, strategy-wise: downsizing.

Of course, it's impossible to stamp an accurate price tag on the promise the new issues embody. "People understand that there's real value in coming up with innovation in software that helps business do business better, and in the Internet and in any tools that offer productivity improvement," says Kenneth A. Mabbs, director of investment banking at First Albany Corp. "Technology has gotten some very sexy valuations. But the whole thing has gotten elevated. Everybody's overvalued." Indeed, all it takes is a drop in earnings -- say, from earnings per share of 21¢ to 15¢ -- for this fickle crowd to drain a stock of one-third of its value. It happened to software maker MapInfo last summer. And that company didn't lose money. "People are buying promises of growth," notes Mabbs. "If you do not deliver, you do not get punished. You get beheaded."

So, still feeling swept up in the public-market mania? Still anxious to join that elite club of public-company CEOs -- and maybe even the ultra-elite Inc. 100 (see [Article link] for this year's ranking), the country's fastest-growing small public companies?

Of course you are. It's a rite of passage, the most concrete manifestation of what building a business is all about: creating wealth. OK, so maybe you won't have a day like Netscape Communications' Marc Andreessen, who saw his net worth rise to $58 million last August 9. You'll still gain a satisfying sense of accomplishment, not to mention a bulky bank account. But before you make up your mind -- for good -- it's worth taking the time to look beyond the overheated hype. What can you learn about the process from this bull market? "No Tech, No Takers" ([Article link]) shows how this year's market shatters some myths about going public. For a peek at the one part of the going-public process that most companies keep to themselves, read "The 100-Day Makeover" ([Article link]). And "Now Let's Talk About You" ([Article link]) should remind you of an aspect of going public that's been all but forgotten in the tales of Fast Big Bucks: as a company builder, you may be forced to make some sacrifices you hadn't counted on.

Not that any of that should discourage you from adding to what could be the biggest year ever for IPOs. (About 200 companies went public in the first quarter of 1996 alone.) "There's never been anything like this," says Mabbs, who adds soberly, "but there is going to be some crashing and burning. No matter how much excitement there is right now, no one should forget that."

-- Joshua Hyatt

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THE #1 COMPANY

AmeriData's strategy: combine and conquer

AmeriData Technologies Inc.'s five-year sales growth of 135,647% is pretty staggering. The company, based in Stamford, Conn., is a computer reseller and systems integrator, part of an industry that's been experiencing a high rate of consolidation in the past few years. Although not quite the largest company in its industry, for the past three years AmeriData has been the fastest growing, hammering out more than 30 acquisitions since 1992.

Why all the consolidation? In a word, margins. Increased price competition among manufacturers, as well as budget consciousness on the part of the end users' companies, has all but erased the margins in hardware and software resale. In essence, those products have become commodities.

AmeriData's three cochairmen, along with its handful of key competitors, are jockeying to acquire more companies engaged in such higher-margin pursuits as equipment leasing, information-systems outsourcing, and consulting services. Jim McCleary has more than 25 years of computer-industry experience. And Leonard Fassler and Jerry Poch are no greenhorns when it comes to mergers and acquisitions.

What is now known as AmeriData began when Poch and Fassler founded Sage Alerting Systems, in 1990. Sage designs emergency-alert systems for high-risk environments such as petrochemical plants. Sage went public in 1991 in a relatively small public offering of just under $5 million. The alerting systems gave Poch and Fassler exposure to the network-integration industry. They saw an opportunity and began acquiring companies in November 1992. In June 1993, Sage, then a $75-million company, acquired AmeriData Inc., at the time a $150-million company with McCleary as its president. In September 1994, Sage changed its name to AmeriData Technologies Inc.

Even as AmeriData grew ever larger, its cochairmen wanted to ensure it could keep the advantages of its smaller acquirees: the ability to innovate and take risks and to stay close enough to the end users to respond to their shifting needs.

"We believe you can't have more than three or four levels of management between the CEO and the doer," says McCleary. "In a fast-moving market, more than that makes the management process too complex." AmeriData's six regional presidents and two product presidents each develop a business plan for the central office's approval. They're given full decision-making authority to execute the plan, though they're held to benchmarks established by the central office. Local companies with accountability to a national office, the cochairmen believe, provide AmeriData with the best of both worlds. -- Christopher Caggiano

THE INC. 100

The companies to watch in 1996, from bagel bakers to laser makers. Below is a composite picture. See [Article link] for the full listing

The Companies
Median five-year sales growth 2,239%

Percentage that are profitable 69%

Median age* 8 years

Median number of employees in 1991 31

Median number of employees in 1995 260

Median revenues in 1991 $1,796,000

Median revenues in 1995 $47,144,000

Median productivity (sales per employee) in 1991 $52,289

Median productivity (sales per employee) in 1995 $167,310

Number of Companies by Industry
Computers/software 32

Health/medical 25

Consumer goods/services 18

Communications 13

Environmental 5

Industrial equipment 3

Other 4

The CEOs
Also founders 49

Born outside U.S.* 22

Median age* 49 years

Median compensation $240,000

Median equity held 5%

*based on data from 93 respondents **based on data from 73 respondents

Education*
High school diploma 12%

Graduate degree 21%

M.B.A. 25%

Other management degree 38%

The IPOs
Median time it took to prepare for IPO* 5 months

Median amount of money raised in IPO* $23,000,000

Median cost to go public** $2,640,000

How IPO Money Was Used*
Buy capital equipment 60%

Boost sales and marketing 49%

Boost research and development 46%

Make acquisitions 41%

Pay down debt 34%

Increase savings 11%

Give cash to owners 6%

Buy out investors 2%