by Will Ashworth | July 22, 2013 10:41 am
America had approximately 7,500 public companies in America in 1997. Yet by 2000, that number fell 33% — down to 5,000 companies, and today, the Wilshire 5000 consists of just 3,687 stocks.
Companies are going private at an alarming rate, and the tide needs to turn before investors run out of options. I’ve put together my own list of five companies I’d like to see go public.
This list represents some of the biggest businesses in America, so interest in these IPOs would be tremendous:
If you’ve ever eaten at McDonald’s (MCD), you’ve indirectly helped fill the coffers of this Chicago-based company.
With more than 14,000 employees and annual revenues of $20 billion, Reyes‘ Martin-Brower subsidiary serves more than 18,000 McDonalds around the world. Reyes Beverage Group sells more than 100 million cases of beer annually to 32,000 accounts in 10 major U.S. markets. Finally, its Reinhart Foodservice division supplies fresh produce and equipment to customers in 45 states. It’s the largest privately held, family-owned distribution company.
So who’s behind this massive organization?
That would be 59-year-old Chris Reyes and his 57-year-old brother Jude. Along with their father Joseph, they acquired a Schlitz beer distributorship for $740,000 in 1976. The rest, as they say, is history. Today, the Reyes brothers are both on the Forbes 400 list of America’s wealthiest persons, each with an estimated net worth of $3.3 billion. Although they run the 16th largest private company in the U.S., they’re relatively unknown outside Chicago.
But you can’t go wrong selling food and beer.
This is a private equity firm run by Los Angeles-based Tom Gores that has acquired more than 150 businesses in its 18-year existence, employing $3.45 billion in capital. Platinum Equity uses a strategy it calls M&A&O, which applies an operational expertise on top of the traditional merger and acquisitions model.
The company’s best known asset would be Palace Sports & Entertainment, the vehicle Platinum bought in 2011 to acquire the Detroit Pistons, The Palace of Auburn Hills (the Pistons’ home) and DTE Energy Music Theatre. That’s just one of 31 businesses Platinum currently owns — no wonder Gores is worth $2.5 billion. His brother Alec also runs a private equity firm in Los Angeles — Gores Group — which focuses on information technology.
I honestly thought this consumer products company company would rank higher than 29th on Forbes’ list of America’s largest private companies. With annual revenues of $9.4 billion, SC Johnson & Son is run by CEO Fisk Johnson, a fifth-generation family member.
Started as a parquet flooring company in 1886, its products include many household names. In fact, you’ll probably recognize more brands on its products list than you do for Procter & Gamble (PG). This would be a very popular IPO if the Johnson family ever decided to go public.
Unfortunately, with one of the heirs — Curt Johnson — facing 40 years in jail for sexual abuse of a minor, the family are likely eager to fly under the radar for the immediate future. The odds of an IPO are therefore slim to none.
The Kohler family has built four significant businesses since founder John Michael Kohler purchased the Sheboygan Union Iron and Steel Foundry in 1873. Construction people know Kohler for its kitchen and bath fixtures. And Golfers know the name because of CEO Herb Kohler’s wonderful golf experiences in Wisconsin and St. Andrew’s in Scotland.
Kohler is the 70th largest private company in America, with 30,000 employees and an annual revenue of $5 billion. One of its newest businesses making gourmet chocolates began with Herb Kohler’s search for the perfect chocolate turtle. Anyone who’s owned a bathroom tap from Kohler knows the company has exacting standards; Kohler applied those same standards to chocolates in 2007, and today it has 55 varieties all approved by Kohler himself.
Of the five companies I’d like to see go public, this would be my favorite because of its diversity of businesses as well as its great history.
The craft beer business continues to grow while mainline breweries stumble along. Sure, the Budweisers of the world produce way more volume than craft brewers do, but they’re not nearly as interesting. The second-largest craft brewer in America by volume, Sierra Nevada Brewing is based in Chico, Calif..
Founded by Ken Grossman in 1980, the company is in the process of opening a new brewery in North Carolina to handle its increasing popularity. In 2012, Sierra Nevada shipped 966,000 barrels, a 12.6% year-over-year improvement and its best result in over a decade.
A telltale sign craft beer is gaining ground — Costco (COST) generates 30% of its beer sales from craft brewers like Sierra Nevada. Everywhere you look there’s a new statistic about craft beer booming. While Boston Beer (SAM) is by far the largest craft brewer at 2.1 million barrels, Sierra Nevada is charging forward.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.
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