How Did Home Depot Go Public in 1981?
David Rosenthal says Home Depot went public in 1981 because four Atlanta stores did not have the cash to take the Florida leases in front of them. The company had lost about a million dollars in its first months of 1979 and made about a million in 1980, which was not enough for the next cities. Interest rates were above 20 percent. Ken Langone was no longer an investment banker, so he pushed Bear Stearns to lead a deal aimed at $6 million, half for expansion and half to cash out the first backers at close to a double.
The week before the offering, Bear Stearns could sell only about $3 million. Ken told those investors to stay in so the money could stay in the company. The deal raised $4 million at a $32 million market value after the offering. Adjusted for inflation, the hosts put that starting size around $122 million. It was still a four-store hardware chain in Atlanta, which is why a public buyer could get in before the national expansion.
