A company creating its initial public offering is a lot like an individual deciding to run for office or becoming a celebrity, according to Brazilian businessman Patrick Lucchese. Once one becomes a public figure, all the secrets come out.
For individuals, that means media outlets will spend hours digging through old tweets, mentions in hometown newspapers, long-dormant social media profiles, and more. For companies, it means opening up the books to honest evaluations and, often, a realignment.
That's where Patrick Lucchese comes in. After a successful career running his family's company and time spent as a banker, he realized he had developed a unique set of tools. He founded Urban Advisors as a way to help other private businesses prepare for a successful IPO.
"I work to help entrepreneurs make their dreams bigger," he said. "We take businesses that have been family owned and help them transition to the next level, a bigger level, so that their company can continue to provide for the family as the family gets bigger."
The idea behind an IPO seems simple: A private company decides to allow public investors to buy ownership shares. It sounds like an easy way to raise capital to fund new projects, make upgrades, or invest in better facilities.
However, there's a lot that goes on under the hood. IPOs carry significant cost, risk, and demands on executive time. Simple blunders during the process can deal a substantial financial shock, cause infighting among owners, and diminish investor appetite for stock purchases.
"We start at the very basic level and help the owners see their company for what it really is," Patrick Lucchese explained. "Many companies have several lines of products or services, but they aren't always aware of how profitable each line of products is. So we help them figure that out so that everyone has a good understanding of where things are profitable and where they can focus in the coming years."
This gives entrepreneurs a close look at the exact workings of their company. Once it's done and the owners have decided on a long-term strategy, Lucchese and his team at Urban Advisors help the ownership group set up a formalized decision-making body.
"A lot of times in family businesses especially, they don't have a council, so we create one for them," he said. "We help to build an effective organizational structure of the executives, find out in detail how much net revenue is coming into the business. But we also help the family adjust to the concept of a new way of doing business."
The last part is key. Navigating a business through the modern economy is a hard road, full of obstacles both expected and unforeseen. Working with family members, especially through a huge transition like an IPO, might be even more complex.
It helps to have a trusted outsider who can see things from a different angle and deliver advice that isn't clouded by years of shared familial history, Patrick Lucchese said.
"When you have a family that owns a business, especially if it's owned the business for a long time, there are a lot of informal ways that business is handled. Sometimes you have people who are in the family who are partners in the business, but do not have a formal role in the company. Often that has worked for years and years, and it's hard to adjust to a different structure," Patrick Lucchese explained. "So we help them sort that out. We try to help them by demonstrating how other family companies have moved into being a public company, how they did it, what the compensation packages looked like for executives, and so on."
For some family businesses, an IPO is simply a means to grow bigger and faster. For others, an IPO is a chance to restructure the company so that it works better for the owners, meaning that it provides for the founders and other family members.
"Oftentimes, we see a situation where a company is very rich and doing very well, but the family members who own the company are rather poor because of how the company is set up. Some companies don't like to pay dividends to family members, which can cause problems. So we help with things like that, so that everyone can benefit," Patrick Lucchese said.
"We've been very successful in helping companies create an IPO, and it means a lot to us to be able to help families with it," he added. "We have found that by focusing on helping the family in the long run and making sure everyone feels the process is transparent and fair, everyone wins."
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