from stockholders both inside and outside the company. He regarded it as a burden to have investment analysts constantly prying into the business and to have to report frequently to the SEC. Pressure to grow earnings kept the company from embarking on major R&D programs and forced it instead into an acquisition program. Initial acquisitions, concentrated in the two areas of ocean-related research and technology and electronic instrumentation, had only mixed results. But over time it was EG&G's acquisition program, perhaps induced by public market pressures, that eventually made it a multibillion dollar firm.
The initial observation in this chapter that technology-based firms can sell the sizzle or the steak is borne out in the evidences introduced throughout the analyses of the two samples. Whether recently or fourteen years earlier, technical firms that go public have different motives and different consequences, depending significantly on their stage of development at the time of public offering. The data show that technical firms that go public split about 50-50 between early stage and later, the half selling sizzle only going public at founding or typically within their first three years of existence, with fewer than 25 employees and at best a few hundred thousand dollars in sales. Those that are "selling the steak" are much older, averaging eight years, have several hundred employees, and sales revenues from $1 to 50 million.
Table 8-7 lists the statistically significant benefits accruing more to the larger firms (compared with their smaller counterparts) in the two studies, as enumerated in the chapter, clearly one-sided in supporting the gains from waiting for the further growth to be achieved. The larger companies are better prepared for and in greater control of their decisions to go public. They more carefully search for and find higher quality underwriters. The larger companies' deals cost them less in direct and total costs, as well as in warrant dilution of their stock. Their stock sales go smoothly and they even gain surprisingly in immediate after-market price appreciation, although this differential benefit is not sustained over the smaller companies. After the fact the larger firms feel that they had also benefited more in regard to acquisitions, personal entrepreneurial liquidity, and employee perks.
But if the principal purpose of going public is to raise needed capital, then both large and small firms meet their requirements. And neither group feels it has incurred meaningful disadvantages in the process. What is not measured in the formal data collection presented in this chapter is the impact of going public on survivability of the firms. Here, in contrast, the clear advantage is gained by the smaller companies, many of which in