Women are real assets on the management teams of publicly traded companies,
according to a 2007 report by Group and Organization Management, which found
that women have a positive effect on a firm's short-term performance, three-year
stock price growth and growth in earnings per share.
The report speculates that these boons come from better innovation and
problem-solving processes that occur in more diverse top management teams. So
why are so few women at the helms of publicly traded companies?
"Women seem to be doing a great job starting entrepreneurial firms and
growing them, but they may avoid the IPO route, because it leads to changes that
don’t fit with the reasons they set out to be entrepreneurs in the first place,"
says Theresa Welbourne, president and CEO of research firm
eePulse Inc.
Amy Black, 48, president of
HelloWorld, a subsidiary of DigitalFX Networks,
says going public was not on the agenda when she and her husband, Craig Ellins,
54, started their subscription-based video, social and business networking
website. "We feared we would lose control," Black says. "Then we learned we
could go public through a reverse merger and keep control of the company."
The Las Vegas company was listed on the American Stock Exchange in August,
and since then, Black has found many benefits to being a publicly traded
company, including capital for M&A and better retention of key employees. The
company finished out 2007 with $22 million in sales.
For Nancy Duitch, 53, founder and CEO of
Vertical Branding
Inc., a consumer
products, branding, marketing and distribution firm, going public became a
viable option when the company needed capital to grow. Duitch’s Encino,
California, company was acquired by an existing public entity, but she says the
process was sometimes scary. "I was used to being involved in every decision and
had to bring in trusted executives to make those decisions," she says. "It took
time for me to let go." Going public brought Vertical Branding the working
capital it needed, and within the first nine months, it made an extremely
profitable acquisition. The company hit revenue of about $37 million in 2007—up
from $23.4 million in 2006.
"Being a woman owner of a publicly traded company can raise some eyebrows,"
says Black. "But I’ve found that investors can see and hear my commitment and
passion for the company."
What needs to happen to increase the number of women-owned publicly traded
companies? Welbourne identifies two factors: First, women-run firms must want to
go public, and the keepers of the domain (VCs, angel investors, etc.) must be
willing to keep women in the top job; second, women entrepreneurs need to learn
more about the IPO process and how it can help them.
Says Duitch, "The public market should embrace women in CEO positions, as
they tend to treat their companies in a team-oriented, nurturing manner that
leads to positive growth."
Originally published in the April 2008 issue of Entrepreneur magazine.