The Housing Chronicles Blog: For Dominion Homes, Private is Best

Friday, January 18, 2008

For Dominion Homes, Private is Best

14 years after going public, Ohio-based Dominion Homes has decided to turn its back on the public markets and revert to a privately held company. From a story:

Dominion Homes, Inc. (Nasdaq:DHOM) announced today that it has entered into a definitive merger agreement to be acquired by a buyout group consisting of companies affiliated with Angelo Gordon & Co., L.P. and Silver Point Capital, L.P. and the Company's largest shareholder, BRC Properties, Inc. Douglas G. Borror, a principal of BRC Properties, will remain in his role as Chairman of the board of directors and Chief Executive Officer of the Company...

"The homebuilding industry continues to be in a very difficult period," said Mr. Borror. "This transaction will allow Dominion Homes to continue our 55-year tradition of building quality homes that exceed our customers' expectations."

Translation: Wall Street can go to hell!

Although being a public company can make it much easier for a homebuilder to raise capital, it can also sometimes be more trouble than it's worth. Between investors with extremely short time horizons and analysts constantly second-guessing management's decisions, one wonders when top execs find the time to actually run their businesses.

In the early 1990s I worked for a newly public homebuilding company which eventually went bankrupt (not my fault! no one listened to my warnings!) , and after a second offering the CEO of a large private builder asked me why we didn't simply take out a debt offering instead of going public. "Wasn't my decision," was my response, "but we certainly should have!"

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