06/02/2014 01:29 pm ET Updated Aug 02, 2014

When Taking the Company Public Is Personal... Think Twice

Many private business owners when looking at an improving economy and buying into the hype of initial public offerings get seduced into taking their companies public without being fully aware of what they're getting themselves into. While the financial rewards are tempting, IPOs are in many crucial ways a "last best option" for raising capital today. I would suggest that those eager to take their companies public take off their rose-colored glasses.

I know, because I've been there... there and back.

According to Renaissance Capital, in 2014 more than 115 companies have already priced IPOs, a more than 55 percent increase over the same period last year. And, last year's offerings were strong.

Dealogic, a platform used by investment banks and investment advisers to help optimize their performance, is reporting that if all the IPOs currently planned in Europe launch as scheduled, the first quarter of 2014 will be the strongest year's start since 2007.

My own company, Syms Corp., was founded in 1959. We took it public in 1983 when off-price retail was a hot ticket on Wall Street. While I didn't take the helm of the company until 1998, I saw first-hand the vast difference between running a private company verses a public enterprise.

In the 1980s Syms was considered a successful mid-cap public offering. It generated wealth for its shareholders and helped create new jobs. It also helped establish the Sy Syms Foundation, which has supported charitable, educational and cultural organizations for more than three decades. When Syms went public my father and his colleagues on the board of directors ceded some control, as is the case with any IPO, but they did it without compromising the original Syms mission: to offer budget-savvy consumers great deals on designer clothing.

Today, Syms would be considered a micro-cap, utterly dwarfed by the mammoth corporations that dominate the business landscape. Yet, as a publicly traded company, it would be required to follow the very same regulations as its much larger counterparts, including Sarbanes-Oxley requirements (which set new and enhanced standards for financial governance), which didn't exist during my father's tenure. This isn't to say executives at public firms don't or can't manage this difficult balancing act, but it is difficult.

The private business owners I know understand these regulations only too well. Many can cite them chapter and verse. But that doesn't mean they're prepared for the crushing financial pressure that accompanies compliance, the loss of autonomy, and the scrutiny of shareholders and Wall Street. And it hits smaller public companies that much harder.

Mary Jo White, the dynamic and forward-looking Chair of the SEC, has recognized the need to adjust regulatory expectations for different size businesses to get rid of the "one size fits all" approach to regulation. But even with diligent focus, any movement on the federal level will take time.

With that in mind, I urge private firms to cherish their independence. The overwhelming majority of business owners I know take enormous pride in their organizations. They've invested more than just monetary resources in them; they've staked their reputations and, often, their senses of self and purpose in them. Ceding control via an IPO, or private equity firms and hedge funds, can quickly erode the personal relationship you have with your company -- a difficult thing regardless of the short-term payoff or the potential long-term success. Even firms that go public and stay viable for decades aren't necessarily able to keep their original missions intact or their founders at the helm. There are always unintended consequences of cashing out that can't possibly be anticipated.

If the company leaders knowingly look at the IPO as an exit strategy, that's a viable scenario. But for leaders of small to mid-sized businesses who are personally invested in the long-term stability and viability of their enterprise, I strongly suggest a dose of skepticism and thinking twice before going public.