When Web development firm Logical Design Solutions Inc. filed for an IPO on March 30 of 2000, it hoped to raise around $56 million to pay off some debts, fund sales and marketing efforts, and expand the company through methods such as acquisitions.
But instead, after months of testing the market, the company pulled its IPO on December 20. "At the time, we [thought an IPO] was a good move for the business," says president and CEO Mimi Brooks, 41, a former AT&T executive who founded the Morristown, New Jersey-based company in 1990. But the slowing market gradually changed Brooks' mind.
Brooks says the IPO would have ensured the continuation of the company's rapid growth. In the first half of 2000, the company's revenue increased from $6.6 million to $16.7 million, and operating income rose from $400,000 to $3.9 million. Local Design also had some minority equity investments through VC firm Summit Partners that it was planning to pay back if it had gone public, says Brooks.
|Number of IPOs withdrawn between
January 1, 1999, and March 20, 1999:10|
Number of IPOs withdrawn between January 1, 2001, and March 20, 2001:57
SOURCE: Hoover's Online
While the company's run at an IPO didn't incur a chaotic financial crisis after the offering was pulled, Brooks says its business model still took a more positioned approach coming into 2001. She became focused on reaching aggressive revenue targets. "Our tactic was to go heads down and run the business," Brooks says.
The company also revamped its broad marketing messages to focus on its enterprise portal expertise and to home in on the buying habits of its Global 1000 clients, a list that includes MetLife and Time Warner. "We're on the ground with our clients and are communicating more," Brooks says.
The company didn't see any need for layoffs, and it hasn't taken any VC funding so far this year. According to the company's addendum, it closed 2000 with $34 million in total revenue on about 13 percent profitability. Business is expected to grow 25 percent over 2000, Brooks says. "We're in the top end of our space."
Brooks is at peace with the company's decision to pull its offering and isn't contemplating another try this year. "We closed that chapter when we pulled our IPO in December," she says. "For now, I'm happy to sit under the radar screen, below all the noise."
Chris Penttila is Entrepreneur's "Staff Smarts" columnist.