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Key Idea: Go Public

Socrates Chombakos was the CFO responsible for the financial paperwork required to take the company public.

Key Question:


Go to Wall Street to raise money.

Raising money through the stock exchange is appealing because it can make the initial owners of the company very wealthy over night. The infusion of dollars gives the leadership cash to grow--they can hire more people, buy more equipment, and do more advertising to win new customers. It is all a gamble. When a company is publicly traded, it must have a board of directors, file many reports and keep stockholders informed. Small business owners have historically been not interested in others owning part of their business, however, the stock market can be the road to enormous wealth.

The Securities Exchange Commission regulates the IPO process and it is laden with rules. You must have attorneys, CPAs and investment bankers involved and you must keep excellent records throughout the development of the business.

Think about it

Would the public buy your idea?  Would the public love telling people that they own a piece of your business?  How would your company stand out to investors who have plenty of choices.

Clip from: UroCor (acquired by Dianon Systems)

Oklahoma City: This episode of the show was done to learn how to take a company public. Here the founder had raised the first-round of private equity investment to commercialize his invention but didn't know how to run the business and get those products into the market. 

The early-stage investors brought in Bill Hagstrom (pictured above). 

We see that it took a person with Bill's experience to get this disease management business into gear. Today UroCor provides a comprehensive range of services for detecting, diagnosing and managing bladder, prostate and other complex urologic conditions.

Under Bill's leadership, in just six years UroCor grew to $25 million in sales with 200 employees. One of UroCor's biggest obstacles was recruiting experienced leadership from large health care companies in the East.

Bill Hagstrom is all about constantly learning.

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UroCor, Inc. (now Dianon Systems, Inc)

Bill Hagstrom, former CEO

800 N. Research Parkway
Oklahoma City, OK 73104
800 634 9330

Visit our web site:

Office: 800 634 9330

Business Classification:
Also: Health Care

Year Founded:

Go Public

HATTIE: (Voiceover) After successfully raising venture funds, it was decided that the next step would be an initial public offering. Socrates Choumbakos, the chief financial officer, explains the process.

SOCRATES CHOMBAKOS (Chief Financial Officer): Once you filed the registration statement, that was the first major step in the process, which is a filing with the Securities and Exchange Commission, that describes the financial history and the business of the company, lays out who the investors are, who the management is, everything you ever wanted to know about the company, in language that the SEC can understand in the hopes that investors would understand it.

Then you prepare what's called a road show, which is a presentation in less than 30 minutes for investors because you will go around--if you've selected underwriters, they will arrange visits with institutional investors and various money funds and so forth to allow you to explain your story and why you think the company will increase in value over time to help these people decide whether or not they want to buy your stock. That's called a road show because, in our case, we visited cities over nine days and made 54 one-on-one meetings. We had lunches. We had breakfasts. We had conference calls with Sweden and the UK and people we couldn't actually meet face-to-face to tell the story.

HATTIE: So, Soc, what advice would you give a small-business owner who truly believes they're sitting on a great idea that deserves public funds?

SOCRATES: Well, part of it would be a matter of starting sooner rather than running faster. We started with trying to refine and tell our story several years earlier. We started talking to investment bankers that were very active in our industry, and there are groups that are more active in certain industries than others, so that they would understand our story. They would have a history with us over time so they could say, `These people did what they said they were going to do. We've know them for several years, and your credibility is increased.'

We did other things, too. Of course, you have to have a business plan that lays out the assumptions and the financial projections for the company and why you think you will continue to increase in value. We also did things like looking at the capitalization of the company. We adjusted the number of shares so that the number would be in a reasonable range for an IPO. We changed some of the terms of some of the other agreements that existed in planning for that. And very importantly, while we knew we had very top-shelf accountants and we'd been audited for several years, that's really important. It's hard to go back and it's very expensive to go back and audit three years' worth of statements when you're starting cold. We had Arthur Andersen doing that. We had Fulbright & Jaworski as our legal counsel for several years so they knew the company.

That raises the comfort level of the underwriters. We also adjusted the composition of our board of directors, which had been all venture capitalists, plus Bill, two years ago, and now is--we actually have two venture capitalists, four independent directors and Bill Hagstron as the chairman. So a lot of it is preparation that can--you need a couple years of lead time to get ready. But then when you're ready, I think we were able to move very quickly and do a first-class offering in a very good market.

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