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Strategies & Market Trends : Value Investing
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To: Michael Burry who wrote (7606)6/28/1999 1:58:00 PM
From: Bob Rudd  Read Replies (1) of 78663
 
DACG: <<why are they public?>> This is not a question I generally look at, but here are some ideas:
Limited liability - Some ERP installations have failed spectacularly with ugly impacts all around. Legal SOP is sue everyone involved. Perhaps top management wanted to protect personal assets. Law firms don't have option of incorporating to avoid liability, I believe. Same for accounting firms.

Seeking higher valuation - When they went public ERP was catching seriously high multiples and y2k impact wasn't on the screen. Perhaps owners wanted these multiples and opportunity to cash out portion of holdings.

Using shares to acquire private entities..consolidation - This strategy was more popular when they went public than current.

Stature of being public company may have elevated them above private companies they compete with - Perhaps important to Fortune 500 types they sell to.

Stock options to reward key employees may have been facilitated by going public...retention of key employees, the main asset of such a biz, is key issue.

All the above is speculation on my part, of course.

One of the interesting ERP trends that may play to DACG's advantage is the shift in emphasis towards front office, customer-focused info-aps. Siebel Systems seems to be leading here. The result is that companies will often end up with SAP backbone ERP, Siebel or some other front end, and some other stuff to connect and fill in the blanks. Since the application providers offer training and are thus competitors, I would think an independent would be preferable for end to end training projects with multiple applications...to tie it all together. And training would seem to be a mission-critical aspect to these complex installations...If the employee's don't know what they're doing...the outcomes will almost certainly fall short.
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