Publicly owned companies face additional challenges

The leadership of three locally based public companies agree that going public has advantages, but it is not without challenges.

"If you are a big company, you should be public, you get better financing," said John Q. Hammons, chairman and CEO of John Q. Hammons Hotels Inc.

Michael Henry, chairman and CEO of Monett-based Jack Henry & Associates Inc., said the injection of public money allows liquidity and funding for expansion.

"It's a nice way to do it without having to go to venture capitalists who might not have your best interest in mind," Henry said.

He added that infusion of money from stock purchases provides stability and gives a company the ability to share ownership with employees.

David O'Reilly, chairman and CEO of O'Reilly Automotive Inc., said going public not only allows opportunity for ownership by team members, but it allows family members to phase out of the company without leaving a hole in management.

"It also provides a means of valuation," he said.

Background

Hammons, who just opened a new hotel in Tulsa, has three more in the works in Rogers, Ark., Hot Springs, Ark., and Oklahoma City, Okla., for a total of 150 hotels under company management. The company is traded under the symbol JQH on the AMEX exchange.

"Where the lights are, there are people and a market," Hammons said.

The company was founded in 1970 and be-came a public company in 1993. The company owns and operates hotels in 40 states.

Jack Henry and Associates Inc., which provides software to banks and credit unions nationwide, was founded in 1976, incorporated in 1977 and went public in 1985. The company is listed under the symbol JKHY on the NASDAQ.

O'Reilly Automotive Inc., which is in remanufacturing and retail of auto parts, was founded in 1957 and became a public company in April 1993. The stock symbol for the company is ORLY on the NASDAQ.

Challenges

In regard to recent months, Hammons is not pleased with tightened government and Security Exchange Commission rules and regulations that have added expense and paperwork to doing business as a public company.

"It's the result of a scared Congress trying to prove they are doing something about the Enrons and Worldcoms; but it is bad for smaller companies because of the extra work and the cost," Hammons said.

He cited the Sarbanes-Oxley Act of 2002 as the big stick Congress has used to whip companies into line. The act provides for a five-member board with which certified public accountants must register and report.

The board established an "annual accounting support fee" to cover costs of reviewing and processing applications and annual reports.

The new level of accountability for public entities puts the performance of the company before the public, according to O'Reilly.

"It puts pressure on the management team to perform," he said.

Happy stockholders

Henry said his company experienced 13 straight years of growth until 2002, when the industry was caught in the downside of the stock market.

"We've seen (cycles) before, and we will continue to see them," he said. "You have to run a company the way you should and be aware it will come back around.

"As a company held up for public scrutiny, you're less likely to take risks," Henry said. "You have to grow things in the right way and make sound decisions."

O'Reilly said that the best way to keep stockholders happy is to perform to expectations and do as promised.