Employee owned to public

[snowshoe]

What can an employee expect to happen when a company that was employee owened turns public? Are there any trends to note? Stock prices rise/drop, layoffs, etc? We are trying to do a preferred stock sale and I've been told that if we don't buy those stocks back within a certain amount of time, we have to go public? That true?

[Rathji]

Clearly this is not my area of expertise, but I understood 0% of what you just said.

[DoubleF]

To clarify...

So the first part, do you mean when a company goes private to publicly traded?

Second part being trends relating to private to publicly traded companies in terms of operations and valuation?

Third part I'm lost. I don't think pref share sales/repurchase or whatnot equates to a requirement for a company to go public, but maybe it's a business plan of some sort?

[Slava]

I'm a little confused by what you're asking as well, but in general if you have shares today (or before it goes public) those shares can now trade on the public market. Its hard to say what the impact will be on the prices. Some companies that go public with a lot of fanfare end up with big spikes in their share price that day, and maybe even for a month or more. Sometimes they come back to earth after a while....so hard to predict really based solely on that fact.

The Preferreds sound like they're being offered to you as employees before the public offering? I'm not sure what you mean there.

[Fighting Banana Slug]

As others have indicated, we probably need more info to really give decent comments, but if I were to guess, it sounds like your company is looking to raise capital. Their first choice is to sell preferred shares to employees, which might make some sense, as those typically are non-voting shares and act more like debt, where they essentially pay interest on the amount invested. Failing that, issuing publically traded shares is an option, but I don't think it is the only one. "Going public" is a huge decision; it greatly affects how management controls the company, the reporting requirements, etc.

[bizaro86]

I'll take a stab at this one. I suspect the company in question is private/employee owned. They are raising money by selling preferred to an investor of some sort. The deal with the preferreds is that the company needs to either buy them back (ie, pay back the loan) or go public so the investor can sell the shares that way (possibly through a conversion to common shares).

Anyway, just a guess. To the OP: if your company goes public you'll be able to sell your shares on a stock exchange, or borrow money against them. On the other hand, management will be more responsible to outside investors so they may be less able to consider employee concerns as top priority. Depending on how senior you are/how much stock you own, it could be pretty lucrative.

[CaptainYooh]

This seems like a computer-generated troll post, guys. Don't respond. I've seen this crap on other forums.

Mods should look into this poster's data and, perhaps, remove it. I hate bots...

[snowshoe]

This is it - thanks! Sorry for the confusion.

Currently staff can purchase stocks in the company. We just had a drop in shares 2 quarters ago and have started to increase in price again (outside evaluation).

They are looking to raise capital by going to an outside investor. This is the part that confuses me a bit because some are saying that if the stocks aren't bought back by the company then we have to become publicly traded. I was trying to find out info on what to expect if that were to happen. If we are able to meet our plan for the year then it's not something to worry about but it's an agressive plan. (although we were ahead of it in Feb. there's still 10 months to go!)

Originally Posted by bizaro86

I'll take a stab at this one. I suspect the company in question is private/employee owned. They are raising money by selling preferred to an investor of some sort. The deal with the preferreds is that the company needs to either buy them back (ie, pay back the loan) or go public so the investor can sell the shares that way (possibly through a conversion to common shares).

Anyway, just a guess. To the OP: if your company goes public you'll be able to sell your shares on a stock exchange, or borrow money against them. On the other hand, management will be more responsible to outside investors so they may be less able to consider employee concerns as top priority. Depending on how senior you are/how much stock you own, it could be pretty lucrative.