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YAF(inancial)T: My company is going public

KoolAidKid

KoolAidKid

Golden Member
My company (Science Applications International Corporation, or SAIC) is likely going public this fall. They are a large defense contractor ($7.2 billion in revenue, 43,000+ employees, see here). They have 36 years of continued revenue and earnings growth.

The company currently has internal stock that is only available to employees (currently trading at $48 a share). Those shares will be split immediately before the IPO. The company is planning on taking all proceeds from the IPO and paying them out as a special dividend to employees who had shares going into the IPO. They are estimating that this will be a special dividend of around $4 - 5 a share.

There are restrictions on selling the stock: I can sell 25% of my shares after 90, 180, 270, and 360 days post-IPO.

I already have a fair amount invested, and have the opportunity to purchase more stock before the IPO. I have had the diversification mantra drilled into me since I first started reading, though, so I'm wondering if its a good idea to put all of my eggs in one basket. I'm also concerned that the restrictions on selling the stock might prevent me from realizing any profits. I can afford to lose the money (or at least it would not ruin me) as these funds are completely separate from my retirement and savings accounts.

Any sage advice from the financial gurus out there? Is this too good of a deal to pass up?
 
I wouldn't necessarily expect it to stay high after all of those 90 day intervals, that's what would be my main concern. That dividend might be there to try and compensate for it a little. That's all I can think of at first glance from what you've told anyway.
 
Originally posted by: LuNoTiCK
Depends on how much and how young you are. If you are young I say do it.
Click to expand...

31 years old. I would rather not say how much. I currently have ~10% of my yearly salary invested in the company, and I could invest up to about 15% more. If I did this then all of my non-retirement/savings $$ would be invested in their stock.
 
I'd be very cautious. I've seen several people have their savings completely destroyed by banking it all in company stock.

But on the flip side, I know of many people that worked for my current employer that retired as millionaires 10 years after this place went public.

One thing to keep in mind - if a democrat gets elected to office for the next two terms, it's likely that defensive contracts will be down since democrats typically are for reducing defense spending. The reduced need could have a very negative impact on the stock price of a defense contractor.

I have no idea if that will happen, but it's something to think about.
 
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