Entrepreneurs
Deltek went public in the first place in order to private liquidity for the employees. Many employees had been given stock options. The owner was the founder and CEO, and he was unable to private any sort of liquidity for these options, so the company went public in order to provide this (Johnston, 2003). There were really no other reasons -- Deltek did not necessarily need the capital. But to attract talent, and retain it, the company needed to offer stock options, and without liquidity these were simply not as appealing to prospective employees. So going public was a strategic move to reward employees and help attract new ones. There was some merit to this logic especially at that time. The company could, of course, have pursued other avenues for rewarding employees but stock options were pretty much how it was done in technology back then.
The biggest advantage to going public for Deltek was that it could provide liquidity for the shareholders. Moreover, the company was able to raise some more capital, and being public gave it a higher profile, which was important for helping Deltek to grow. There were, however, many disadvantages. Being public means that the people running the company have to answer...
They have shareholder meetings, a Board of Directors to represent the interests of shareholders, and they must file their accounts with the SEC every quarter. There are significant added responsibilities for being a public company, usually regarding shareholders, and the management thereof. When the shareholders demand short-term results, this can also create strategic problems, where trade-offs between short-term results and building a business for the long-run must be reconciled. This proved to be burdensome for Deltek, ultimately leading to the decision to go private again.
3. Deltek was a profitable company, which distinguished it from a lot of the dot-com companies at the time that were going public. While some of those dot-coms had great businesses -- Amazon and eBay come to mind -- many did not, and even the good companies often went public before they were profitable. For other companies, they went public without having much in the way of a business model, no particular revenues, and certainly no profits. Investors were eager to snap up these shares in the hopes that the company they were buying was the next Amazon, so they were making highly irrational purchases. Deltek was different in…
