The Private 150: The list of the most headaches
- Written by Kim Moore
- Published in Must Reads
- 0 comments
Every year the research editor of Oregon Business puts together the Private 150 list — a roster of private companies headquartered in Oregon ranked by annual revenue.
Sounds simple to do? Well, it is not. As the research editor for the magazine I put together many lists on various sectors. But the Private 150 list is one of the most challenging.
The difficulty lies in the simple fact that companies are required to provide their annual revenue to be ranked in the list. We keep the actual figure confidential, using it only to rank companies within revenue ranges — more than $1 billion, $250 million to $1 billion, $150 million to $250 million, and so on.
Because private companies are not required to disclose any financial information publicly, it can be an uphill struggle to reach the 150 threshold. It takes months to put together (I usually start requesting information in April) and it requires many follow-up phone calls and coaxing.
It has to be said a good portion of the companies readily provide their annual revenue. Many have been in the list for years and enjoy seeing the roster when it comes out in our July/August issue.
But it can be difficult to get new companies to take part and there are always a few regular participants I lose each year because they have either been acquired by a public company, gone public themselves, moved headquarters, or gone out of business.
Why is it so difficult to get private companies to disclose financial information? Jason Brauser, head of Stoel Rives’ corporate practice, says companies that are owned by private equity often face the most restrictions. In some cases, they have entered contracts that discourage financial disclosure. “They often have sophisticated investment contracts that may have prohibitions on what can be disclosed,” says Brauser.
Another hard nut to crack are start-ups. While lists like the Private 150 can showcase fast-growing companies, they can be a liability when start-ups are trying to raise funds and have to be careful not to violate securities regulation. “So much of it depends on timing. If they are trying to raise money from investors they just don’t want to talk to you,” says Brauser.
Then there are family-owned businesses that do not nearly face as many restrictions. These companies are often the easiest to get financial information from because they have steady cash flows and are not beholden to investors.
In an age of increased focus on corporate transparency, there doesn’t seem to be a whole lot of transparency about companies’ financials. Brauser says it seems this way because there are fewer public companies these days than there were 15 years ago.
Regulations like the Sarbanes-Oxley Act and the Dodd Frank Act have made it more costly for businesses to go public. It is now more common for companies to sell securities to just a handful of wealthy individuals who have the resources to do their own due diligence. This explains the rise of hedge funds and private equity funds, which tend to put restrictions on companies disclosing financial information.
Because it is so difficult and time consuming to gather data for the Private 150, I think it is one of the more valuable lists the magazine publishes. It certainly causes me the most headaches. But the fact the data to create the list is often so elusive makes it all the more worthwhile.
Look out for the Private 150 list in our July/August issue.
And if you would like to participate in the Private 150, submit information here.