Profits and Prophets: June

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Staying Private; Jobless Growth; and New Tool for Bargaining

By Art Garcia

Meridian Systems Is Hot, But Cool to IPO Market
Meridian Systems, a private company with more than 8,500 clients (see “Baby Blue Chips,” page 23) has no intention at the moment to go public through an initial stock offering, a once sure-bet scenario during the tech-boom.
    “In the late 1990s, the goal for every privately owned company was to do an IPO,” says James Olsen, the Folsom-based software company’s 57-year-old chief executive. “But over the past three years, the bar has been raised considerably for an IPO.”
    Five or 10 years ago, a private company with yearly revenues of at least $5 million was a good candidate for offering its shares to investors. “These days, you have to be a much more substantial company,” Olsen says.
    “If we could match the revenue threshold, we’d certainly go the IPO route,” says Olsen. “The cost of being public is so much more than five years ago. Look at the Sarbanes-Oxley Act and the staff that has to be added for that. (The 2002 legislation requires every public business to have internal systems to catch fraud and accounting errors.)
    “You can’t get away with less than $2 million a year or more on the expense line, just to meet government criteria and everything else, and that’s a conservative number,” he says. 
Continued...

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