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HOME BUILDERS GIVEN 10 TIPS FOR INITIAL PUBLIC OFFERINGS

 HOME BUILDERS GIVEN 10 TIPS FOR INITIAL PUBLIC OFFERINGS
 West Coast Developers Head East to Wall Street;
 IPO Process Not for the Fainthearted, Warns Expert
 LOS ANGELES, May 11 /PRNewswire/ -- Cash-starved developers considering initial public offerings to raise capital should be forewarned that the trip to Wall Street may be more expensive than they bargained for. The time, money and level of required disclosures shock some home builders in search of financing through public offerings, according to a national real estate expert.
 "IPOs are an enormously challenging and expensive proposition," said Stephen Duffy, managing director of management consulting services in the Orange County office of Kenneth Leventhal & Co. "This is not a process to be undertaken by the fainthearted, the uncertain or those who jealously protect their innermost corporate secrets." Duffy said the trip to Wall Street has been lucrative for builders who raised $377 million in the first three months of 1992, compared to $191 million in all of 1991.
 Speaking before a group of more than 400 builders gathered in Los Angeles, Duffy outlined the following tips:
 1) Don't expect to pocket a great deal of money from a public offering -- the money will go into the business;
 2) Have specific projects designated. It's impossible to raise money for a blind-pool homebuilding transaction;
 3) The company must have a geographic niche and specific product specialty. One person can't be all things to all people;
 4) Have five years of audited historical financial statements with progressive results and an explanation for deviations;
 5) Have an organized and concise business plan setting forth how the company will operate and outlining how the capital infusion will be used;
 6) There must be a capital-oriented business plan defining the company's financial resources and financing needs, and commitment to the future;
 7) Set forth realistic and detailed cash flow and profit projections for each project going into the offering;
 8) Have organizational discipline, management information and reporting systems in place to function in compliance with Securities and Exchange Commission guidelines;
 9) Be prepared to give up perks associated with private ownership, such as airplanes and boats; and,
 10) Be willing to live in the public eye and able to survive detailed public scrutiny.
 Duffy spelled out other key considerations for developers considering initial public or private offerings: track record, time and tenacity. "The first and foremost consideration is track record," Duffy explained. "Strong and consistent performance must be demonstrated through a summary of prior operations, project-by-project profitability, backed by audited financial statements.
 "Time is also important -- IPOs are a long and involved process that may take several months," he continued. "They require the undivided attention of top management and a team of consultants, including attorneys, financial advisers and accountants.
 "And finally, developers must have tenacity. Companies contemplating a stock offering should be prepared to face unprecedented scrutiny," he added.
 Although the process may appear fraught with difficulty, Duffy said he believes that many developers will consider the risk worthwhile because the public capital markets hold tremendous promise for those builders who are successful with initial public offerings.
 Kenneth Leventhal & Co. is the country's eighth-largest accounting firm known for its expertise in real estate and financial services. It has offices in 13 cities and is affiliated internationally with Clark Kenneth Leventhal.
 -0- 5/11/92
 /CONTACT: Francie Murphy of Casey & Sayre, 310-457-3676, for Kenneth Leventhal & Co./ CO: Kenneth Leventhal & Co. ST: California IN: CST FIN SU: OFR


DM-JL -- LA010 -- 8555 05/11/92 11:03 EDT
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Publication:PR Newswire
Date:May 11, 1992
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