Schneider pursuing IPO

Interesting...Thanks for posting.

 

I'm kinda green on this. Is this bad or good?
@TennMan

 

so much for Dons wishes. never should have given up 51% of controlling interest.

 

Sometimes your the bug and other times I'm the bug ain't that how the saying goes.lol

 

While it could go either way, it will more likely not be good. Having to show profits for shareholders generally leads to doing whatever is necessary to achieve that. Generally the things that are cut (if the company can't achieve expected profits from normal day to day) are the unnecessary expenses. I could think of many things that can be considered unnecessary.. say, company cars? Inverters in trucks? Cutting corners with maintenance and not aquiring new equipment... Potentially even cheaper insurance rates by installing driver cameras.

Who knows though.

 

This can be good and bad. The good is an IPO will bring an influx of cash into the company, the bad is, they will probably go on a buying spree, basically buying up the competition. Then there is shareholder value add, meaning they need to keep growing the business as the shareholders expect a return, plus profit on their investment. As many companies find out, over time there are only so many companies, and so much freight, so they start cutting corners. Eventually the stock tanks, the Board gets fired, and they start the cycle over again.

 

It makes the owners rich the day the stock opens.

 

Wow, kinda shocked by this. SNI has always stated how proud they were to be a privately owned company.I wonder what the reason is

 

Basically, the owners are selling the company. They are selling the company to the public. SNI will get with an underwriter like Goldman Sachs or somebody. If they convince the underwriter that its a good idea, then the underwriter goes all over the country to money managers and convince them its a good idea, and to buy some stock.

The underwriter is responsible to make sure the stock will open on the IPO day. They'll decide that there will be 10 million shares outstanding and the owners will own a million shares each.

So if the stock opens at $20 a share. Boom! The owners now have $20 million in equity.

The bottom line is: The SNI owners are leveraging the company as far as they can. And the ultimate leverage is to take the company public.