By Van Mitchell
Special to The Sun
Paycom of Oklahoma City recently filed paperwork with the U.S. Security and Exchange Commission to raise up to $100 million in an initial public offering of its common stock.
The stock price and number of shares is still to be determined for the payroll service company located at 7501 W. Memorial Road.
According to the Paycom filing, it will trade on the New York Stock Exchange under the symbol “PAYC.”
Randal Ice, finance department chairman at the University of Central Oklahoma, said companies like Paycom usually decide to go public when they need to raise equity capital.
“They have grown to a point where they need some additional capital, which is more than they can generate internally or from key investors,” Ice said. “They go public to broaden the market for their securities.”
According to its SEC filing, Paycom reorganized in Delaware as Paycom Software in January. After it goes public, the bulk of Paycom’s stock still will be controlled by Welsh, Carson, Anderson & Stowe, a New York private equity group.
Ice said the timeline of when a stock goes public varies depending on which investment banking firm is handling the transaction and where it wants the stock traded.
“It can be traded on a variety of exchanges,” he said. “It could be the New York Stock Exchange or it could be on the NASDAQ market. There are also other options out there for trading.”
The regulatory filing also stated that the private equity firm now holds a 56.6 percent stake in Paycom and will continue to hold a majority stake in the company’s outstanding stock.
Paycom founder Chad Richison has a 24.2 percent stake in the company, the filing said. The company was founded in 1998 and employs people from across the Oklahoma City metro area including Edmond.
The filing states Welsh, Carson, Anderson & Stowe, which invests in information and business services and the healthcare industry, will control four out of seven director seats at Paycom.
Ice said taking a company public does have the risk that it won’t meet market expectations.
“There is always risk to the investors because there are companies that don’t have a lot of operating history in many cases,” he said. “Any company that has less operating history always has some additional risk because it is new.”
Ice said the volatility of the stock market also has its risks for public offerings.
“For example, you wouldn’t want to take a company public when the stock market is crashing,” Ice said. “That would not be a good time to be out asking for capital.”
Ice said while there are risks with public offerings, there is also the potential for rewards for current and new stockholders.
“The real advantage is for the current stockholders who could be better off once the company goes public and potentially trades for a multiple of book value,” Ice said.
Paycom said SEC regulations prevent the company from commenting at this time about its plans and its current growth projections beyond what it states in its public offering filing and on its website at www.paycom.com.