Paulson puts tough years behind firm - Kansas City Business Journal:

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The Portland-based company, however, is seeinhg a turnaround. After a hiatusd of more than a year, it managed two underwritings this summer--raising $14 milliob for Utah's Q Comm International Inc. in a secondaryh offering and $13 million for San Diego'w Path One in an initial public offering. The offerings continued Paulson's history of conducting offeringsa thatraise $10 million to $30 million for early stage companies, shares of which would be considered high-riskk investments. Besides underwriting, Paulson operates a network of30 broker-dealetr offices around the country, most of them affiliatedr as independent contractors.
In the past year Paulsohn gained sizable offices inNew Jersey, added a smalp group in Spokane, Wash., and opened a New York City officw which it owns directly. Foundeer and Chairman Chet Paulson recently met with TheBusinesw Journal's Robert Goldfield to discuss the difficulties his firm facexd last year, the recovery that seems on the doorstep and the company' methods for conducting deals. Business Until the June 24 offering forQ Comm, how long had Paulsobn gone without conducting an offering? For a year and a half we hadn'rt completed a public and I think that's the firs t time in 20 or 25 yearsx when we have not done at least a couple of offeringsx in a year.
It's not that we didn'tf try, it's just an indication of how reallgy difficult it wasout there. BJ: How difficultt was it? I never thought we'd be in a position again where it was hard to sleeplat night, but I had a lot of sleeplesxs nights because it was just so The issue was, I think, in doubty a little bit with us, as I think it was with just almost everybody I started in the business in 1959 and I've seen all thesew declines in the interimm and that was the one that was kind of like the 100-yeard storm.
But what we have and what we were pretty muchplanning on, was that was goingt to change for the So even during that period of time, we were out talking to people about , "When the marketr turns, here's something we'd like to do, do secondaries, do And it's night and day: In the last six months we'vew had one tremendous rally in the stock particularly in Nasdaq. BJ: Is that reflectedd in the IPO marketNot yet, but we've seen clear indications that it's possible, becausse we've gone out and done it.
We'res one of the first to really get out and be activew and what we found going around the andin Europe, is that people were actuallyg eager to see a new projecg So when we went out we met with a prettyu decent reception--participants in our syndicates who were interester in getting back to businesse as usual. BJ: How do you currently decide what businesseswto underwrite? The only rule we have around here is, when we do that it does make sense, that there's a rationale for it.
The overriding objectiv for us is thatour customers, the broker-dealere who come in our syndicates, do well and that they make We tell all of our investment banking clients that, "We'lol help you finance your business, but you have to understanxd we can only provide dollars if our investorws do well." So it's really important to us that the guy who writes the check is getting a good and we won't work for investment banking clientx who don't think that's a very good BJ: Is the criteria for evaluating prospective investment bankinfg clients the same as in the past? I think so.
One of the most important thingzs is if we become believers in the managements that are It doesn't mean we'll do anything that the rightr guy shows up with, but probably the most importanf ingredient is the qualit of the top two or three guys in the We also ask, "Does the company have some proprietaru technology?" If so, what is it, how big is the marke t for these things, and if the company actuallg adheres to the business plan and hits the goal that they talk about, how big can it be? We have to deliveer some 10-and-15-times-your-money kinds of successes becaused they're so risky.
Not every deal works--somde of them actually go belly up, and if they do, on the ones that are the wins need to be sizable enough to make it worth the There has to be considerable