Emily is going public. After watching CEOs and other Internet executives make millions through stock options-turned-gold, she’s decided it’s time to get in on the action. The outrageous housing costs and cost of living in the San Francisco Bay Area have put a serious dent in her ability to grow her assets.
That’s right. You heard it here first: Emily is filing for an Initial Public Offering (IPO).
This move was inspired by the recent announcement that Dr. C. Everett Koop, the former U.S. Surgeon General and Public Enemy Number One of the tobacco industry, has filed for an IPO. Well, not Dr. Koop directly. Rather, his respected web site, drkoop.com, has filed and hopes to make $50 million. Rumor has it that Martha Stewart may not be far behind with her own media empire.
If Dr. Koop can do it, and we know Martha can (and better than you), so can Emily. All she needs is a good idea — and she’s got plenty of them — to make some money for her investors.
Lose Valuable Cash and Prizes!
She doesn’t even have to be making any money to have an IPO. Dr. Koop posted a $9 million income loss in 1998. iVillage was $43.7 million in the red in 1998. The Mining Company says it had $15.6 million negative income in 1998. At least Emily’s personal checking account is balanced. Already, she’s ahead of the game!
The first step to filing for an IPO, or going public, is to hire an investment bank to act as an advisor and distributor. This is also known as the “Underwriter” (not to be mistaken for “Undertaker”).
While the venture capital players in Silicon Valley are willing to take some great (yet measured) risks to chart new territory, actually selling stocks in a person may be more than they can stomach. Emily may need to go the way of the latest trend — to bypass this middleman and have a Direct Public Offering (a.k.a. an Initial Public Fleecing).
The most difficult part of this period is that there are severe limitations on publicity on behalf of Emily — the U.S. Securities and Exchange Commission (SEC) sees that as illegally trying to condition the public or arousing public interest. So for a while, Emily can’t talk about herself. Ouch.
Small Bills and Lots of Them
Now we need to determine the amount of capital we need, the type of security to be issued, the price of the security, any special features of the security, and other boring details.
Emily needs a comfortable and inspirational place to brainstorm her money-making ventures — somewhere along the Monterey coast of California. We saw a quaint villa there for $17.5 million. Add incidentals — a computer, a fast connection, a maid, a chef and a personal trainer — and we’ll need a modest $35 million for starters.
We have to comply with the Act of Full Disclosure, first enacted in 1933. This has to include a statement or description about Emily, biographical material on the officers and directors of Emily, the amount of shares each insider owns, complete financial statements including existing debt and equity securities and how they are capitalized, where the proceeds are going, and any legal proceedings involving Emily including strikes, lawsuits, antitrust actions, copy/patent infringement suites, and so on.
This should be relatively simple. (Or at least simpler than diagramming that last sentence.)
A statement of the entity raising the money: Emily is just over five feet tall with a mess of curly hair and lots of great ideas and strong opinions. The Chief Executive Officer and Chief Operating Officer are the same person: Emily. Greg is the Chief Technology Officer, however — a role demonstrated by his particular skill at maneuvering the TV antenna for optimal reception.
Emily will maintain a majority stake in herself, 51 percent. We still haven’t determined how much Greg owns and how much we’ll offer the public.
Then the U.S. Securities and Exchange Commission (SEC) mandates a Cooling Off Period, during which the SEC makes its investigation. This used to be 20 days, but now it’s much longer. We’re not sure why. Since her record consists of the one speeding ticket Emily received as a freshman in college, this process shouldn’t take more than 45 days.
We can go back to issuing regular press releases and Emily can go back to talking about herself as she normally does. But she won’t be able to conduct interviews with the news media or deliver speeches that discuss Emily’s financial outlook or her ideas.
During this time, we will distribute a Preliminary Prospectus, also known as a Red Herring. This is the part where we can really hype Emily. We can take photos of the villa on the coast with the view Emily will have from her high-tech home office. All this can go into a shiny 44-color brochure.
She’ll also have to do her road show, during which she travels to major U.S. cities (New York, Chicago, Boston and Los Angeles) to meet with potential investors. For good measure, she’ll need to make stops in Honolulu, Milan, Paris and Bora Bora. You never know where those investors might be hiding out. Besides, this is where investors who understand the importance of a villa may be.
Add Publicity Stunt. Stir. Serves $3 Billion.
Then we’ll wait for the market conditions to be ripe to make a public announcement that Emily is selling stocks! Being the PR maven that she is, there will be some kind of splashy event on Wall Street to attract attention to herself.
Remember when Marvel Comics went public a couple years ago and SpiderMan made a guest appearance at the New York Stock Exchange, climbing around the rafters? Well, it’ll be something like that.
Now how much would you pay?
In 1998, 336 companies went public, raising $31 billion. But the party is winding down. In 1997, IPOs raised $43 billion. So far this year, 13 companies (eight of which are Internet startups) have filed to raise about $781 million.
Why shouldn’t Emily try to get her small sliver of the pie? It’s time for Emily to join the ranks of iVillage, PriceLine, Autobytel and others.
To help ensure her efforts aren’t as schizophrenic as some other on-again-off-again offerings of the past two years, get in on the ground floor of Emily’s investment rocketship to riches by emailing emily- email@example.com. You’ll be glad you did.
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