Just found out that my husband's company is going public...

[cynatnite]

They've already filed the papers and all that from what I understand. They've said that we will have an opportunity to buy stocks before it goes public.

Neither of us know much about this kind of thing or what to do. We think this might be a good opportunity, but I feel like we need to be educated.

Can anyone give me a tutorial of sorts on this or give me some links? We're paycheck to paycheck folks, but we don't want to pass up any opportunities that might help us in the future. I most especially want to know the drawbacks.

Any help or information would be great. Thanks

[elleng]

1. What kind of business is it?

How long in operation? How many employees?

Others here should be able to give you a run down.

[cynatnite]

4. Trucking company...

They have several yards and probably several hundred employees. I'm not sure how long they've been operating.

Just in the last 6 months husband has been accepted into a new program as a trainer and given two significant raises. During a meeting today was when he was told about all this. They are really playing it up. We're trying to keep our expectations grounded.

[elleng]

6. Interesting for me,

as I worked in 'transportation.' Am out of town now, hanging w daughter and new grandson, so can't spend lots of time at DU today, but tell me where located, and about routes and commodities, and maybe I'll have more thoughts, like, whether they think likely a big RR would pick them up down the road, which has happened to a few big trucking companies.

Best

[cynatnite]

7. Those kinds of details I don't know much about...

Husband runs all over the place and carries all sorts of product for a wide variety of companies. I don't know anything else.

[Common Sense Party]

2. I've owned company stock (in my retirement plan) when I worked for

a big publicly traded company. I've never owned stock in a smaller employer's company.

I agree, it COULD be a good opportunity--IF the company does well.

If the company does poorly, though...

We all hope we're getting in on the ground floor of the next Apple or Google or whatever. The reality is that most small businesses either fail or they just don't do that well in the marketplace.

I wouldn't put much of your savings into company stock--no matter what size company it is--because it's too risky to have a huge chunk of your net worth tied up in the fortunes of any one company.

The employees of Enron come to mind--thought they worked for a great company that would be around for ever and grow to the moon, so they put ALL of their 401(k) contributions into Enron stock and...KABOOM.

5% to 10% TOPS of your investments should be in company stock. I'd lean more toward 5% myself, but I'm very pessimistic.

As far as the IPO goes, I don't know. If you have a little cash, buy a few shares, but do NOT borrow money to buy shares.

I like the idea of being able to own a piece of the company I work for. It makes me more involved with the company, gives me a desire to help the company do well.

But I already depend on that company for my paycheck, for my cash flow. Do I ALSO want to depend on them for a significant chunk of me retirement well-being?

[A HERETIC I AM]

3. I couldn't agree more.

If the company is going public then they are looking for a big cash infusion. The stock will have an "offering price" - that price which the underwriters and everyone else involved in the offering THINK will be a reasonable price at the outset of trading. Sometimes it is high and sometimes it is low. Look back at the opening weeks of FaceBook - the stock jumped initially then fell off a cliff (much to the delight of many a DU naysayer) but it has steadily, over time, climbed back out of that and now trades considerably higher than it's offering.

I agree with Common Sense party in that you should be very careful as to how much you put in and if there is pressure to buy more than you are comfortable with, be VERY wary.

Google "Dollar Cost Averaging". Take on small chunks as you can afford it over time, if you do indeed decide to take a stake and you are confident in the company's potential for future profits.

It is not always a bad thing, by no means, but it is not always a good thing either.

[cynatnite]

5. Well, in the last 6 months there have been changes...

My husband was promoted a few months ago as a driver trainer and given a raise. Then just recently they gave him more training and responsibilities plus another big raise. There will be a lot of changes to his job in addition to the raises. They have a lot of confidence in him because of his experience and ability to get things done. From what he told me today, they are looking at him and a select group of other drivers to help push the company forward. We found this out before learning the company was going public.

It seems like they are planning for some major growth in the company.

We're excited about it, too. His future with the company has significantly improved. That's more important to us than the potential earnings.

I just have no experience with this sort of thing. When I googled I read up on what happened with FB, Enron and UPS. Those are unique situations and I don't expect us to have those same results. For one thing, I have no intention of putting all our eggs in one basket so to speak. We have two savings accounts in addition to our checking. That's about it.

We figured we were at the very least going make sure the house was paid off by the time retirement rolled around.

Now, we're wondering if this could get us a little more if we did it. I know it's a risk, but I want to be as informed as possible before we take that step. We're not sure when it'll happen. We just know it will since the filings have already happened recently.

Thanks for the information.

[A HERETIC I AM]

8. It's pertinent that you mention UPS, because they were an interesting situation.

United Parcel Service had, for the majority of its history, been "Closely Held" meaning they were not publicly traded, but they did have shares of company stock and offered those shares to their employees as part of their retirement plan. Other notable companies that do the same thing are Publix Supermarkets and Penske Truck Leasing, both closely held.

Anyway....

Their "Package Car" drivers had been able to take part in that stock purchase plan for years, and many who had been with the company a long time had quite a few shares built up.

When UPS did its IPO in November of 1999, many of those regular Joe, hardworking delivery drivers were millionaires overnight, simply because they had acquired so many shares over the years and the immediate spike in price when trading started made them rich truckers! Of course, they would have had to sell in order to realize it, but there you go! The thing is, UPS has traded in a relatively narrow range for most of the last 14 years, between 50 and $70/share. It closed Friday at 102.52, down slightly from its all time high of $105 reached on Dec 30. It began trading in the $65 range, back in '99

If your husbands firm had not offered company stock before their IPO, then he would of course, not be in that same boat, so to speak.

Now that you have given more detail, it does indeed sound as if they have great confidence in your husband. He needs to (if he hasn't already) have a real good think about how he feels the company will perform in the coming years. Do they have a well diversified customer base? Are new contracts coming down the pipeline? Have they made capital investments to help them stay competitive - like buying new, more fuel efficient tractors? Or is that what the money from the IPO will be used for? How is their overall safety rating? That sort of thing. With the new "CSA and "SAFER" (Safety And Fitness Electronic Records) ratings, how does the company fare?

If the answer is yes to the above, then taking a position in the company shares is probably a good idea. Domestic ground freight movement can NOT be outsourced. There will always be trucks, in one fashion or another.

It sounds like a tremendous opportunity for him. As someone who has spent the better part of the last 25 years in the trucking industry, I must say I congratulate him. It's nice to be recognized!