Should region be concerned about loss of public companies?

Joe Mitchell explored various strategic alternatives for UQM Technologies Inc. (NYSE American: UQM) before deciding to sell the Weld County company to Danfoss Power Solutions (US) Co. The sale, completed July 31, reduced by one the ranks of publicly traded companies in the Boulder Valley and Northern Colorado.

That number will be further reduced when Boulder-based Zayo Group Holdings Inc. (NYSE: ZAYO) is sold to investment firms Digital Colony Partners and EQT Infrastructure IV Fund, a $14.3 billion deal expected to close in early 2020.

Companies go public to raise substantial amounts of money, all while spreading risk over a far greater number of investors. Funds can be used for research and development, acquisitions and expansion.

Public companies sometimes opt to go private due to shareholder pressure, to maximize value to shareholders or to reduce the regulatory burden. In UQM’s case, the company struggled to reach profitability, which made it difficult to raise funds. When the U.S. government rejected an investment by a Chinese company, UQM had little choice but to explore an all-out sale of the company, which makes electric motors.

While Zayo and UQM are expected to maintain operations in Boulder and Weld County, respectively, the loss of publicly traded status diminishes the economy and profile of the region in ill-defined ways.

First, public companies are required to file quarterly and annual earnings statements with the U.S. Securities and Exchange Commission. Those filings provide detailed analysis of a company’s financial health but also raise the profile of the communities in which they’re based.

And successful initial public offerings from a region can create more investor interest in companies from that area.

As companies go private, the local community has fewer ways to gauge the health of that company. And the company itself finds its profile reduced, with fewer press releases and — at times — less community engagement.

This region has lost public companies before, either to closure, mergers, sale or relocation. Some companies have gone through a combination of those factors: DigitalGlobe, formerly based in Longmont, relocated to Westminster in 2015, then merged with a Canadian company to form Maxar Technologies Inc. (NYSE: MAXR), which is based in Westminster.

At times, sale of a public company is the beginning of the end for that company in the region. Rally Software Development Corp. (NYSE: RALY) agreed to be sold to CA Technologies (Nasdaq: CA) in 2015. CA has since vacated the Boulder market, eliminating hundreds of jobs.

More public companies plan changes in the years ahead. Broomfield-based Ball Corp. — parent of Ball Aerospace & Technologies Corp. in Boulder — plans to build a new headquarters in Broomfield.

While the ranks of publicly traded companies in the Boulder Valley and Northern Colorado appears to be thinning, new companies might be poised to expand in the public space, including several cannabis-related companies that have gone public via the Canadian exchange or the over-the-counter market.

But it remains to be seen whether those companies will fill the void or achieve the high profile of Zayo or Ball.

In the meantime, the region will experience a slightly lower profile until the “next Zayo” emerges.

Christopher Wood can be reached at 303-630-1942, 970-232-3133 or cwood@bizwest.com.

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