When SS&C Technologies went public with its initial stock offering on March 31, the employees of the Windsor-based company saw their net worth soar.
Thanks to a strong response from the stock market, 83 employees found their portfolios valued at greater than $500,000, and another two dozen or more are now millionaires, said Bill Stone, SS&C’s chairman and CEO.
No one cashed out and headed to sandy shores, though. Rather, the company and its employees relish the initial public offering’s success as a chance to grow beyond this year’s record earnings and really capitalize on the company’s success.
“For me, I believe in the company, I like what I do, and I like working for SS&C,” said Rahul Kanwar, managing director of SS&C Fund Services, one of the 83 employees with more than 30,000 stock options. “I have an opportunity for the next five, six, seven years to help raise the value of the company, and then there’s an even greater increase in net worth.”
SS&C Technologies was founded in 1986 and employs 1,300 people, with a third of those in Connecticut. The company specializes in providing financial software and related services for the financial services industry. Clients include banks and business schools.
“They are very responsive,” said Jane Ouyang, operations manager for Amegy Bank in Texas, which uses SS&C’s software to track client assets and report their earnings. “They try to include everybody’s requests in their quarterly reports.”
In the IPO on March 31, SS&C raised $161 million by selling 10.7 million shares of company stock for $15 each. Since the IPO, the stock price has risen to as much as $17.19 per share, usually averaging closer to $16.
A main reason for going public was to give employee a public currency of how much the company was worth, Stone said. Rather than people cashing out, he said the IPO drives up employee satisfaction, pride in the company and ultimately retention as they want to see the value grow even more.
“These millionaires created themselves; the company was just a facilitator,” said Stone, noting the majority of SS&C’s executives have been with the company for more than 15 years.
Having a public currency of the company’s value is a great recruitment tool when seeking out new talent. In addition to salary and benefits — which average $98,000 per employee — stock options give new hires a long-term, high-yield investment in SS&C.
“Say I offer someone 5,000 in stock options. Many people don’t have many $75,000 investments,” Stone said. “You can send your kids to the schools you want. You can go on the vacations you want. You can do whatever you want.”
Despite the large windfall on one day, for employees an IPO isn’t like winning the lottery. It’s the culmination of years of hard work which resulted in the company growing in value, Kanwar said.
“All the work we did as a private company put a value on the company,” Kanwar said.
Stone founded the company in 1986 with four employees. SS&C grew to 38 people within three years, but Stone had to lay off 12 of those the following year when business slowed. Revenue drops hit the employee base again in 2000 when the company workforce dropped from 610 to 250. Big growth came again from 2002 to 2009 as the company expanded to 1,300 employees in North America, Europe and Asia.
The bouncing needs of the financial services industry led to the company’s fluctuations. The large workforce reduction in 2000 came because SS&C’s clients no longer needed conversions of the new European currency, the euro, and or updates for Y2K.
Today, the bulk of SS&C’s growth has come in offering software as a service, where financial institutions are provided the software and the outsourced personnel for their processing. That division accounted for $163 million of the firm’s $270 million in 2009 revenue.
“We try not to go too fast. We still stick our necks out, just not as far,” Stone said. “People ask me what our China strategy is, and I tell them ‘Not to lose money in China.’”
The first quarter of 2010 yielded $78 million in revenue for SS&C, the highest for any quarter in company history. The projected revenue for 2010 is $320 million, which would be $40 million higher than any other year’s total revenue.
The IPO was more than just a motivational tool for SS&C. The funds raised enabled the company to pay down its $205 million senior debt load by $71.75 million, putting it on firmer financial footing.
With all the stock reports, news from the IPO, public relations with major financial publications and daily trades, the company has more visibility and marketing than before, Stone said. On June 3, the company executives will open trading on the NASDAQ stock market.
“There’s a buzz; there’s an excitement,” Stone said. “Not a lot of companies in Greater Hartford go public.”
Since the IPO, Windsor realtor William Smith said the now wealthier SS&C employees haven’t come in droves to improve their living conditions, but it’s only been a couple of months.
“Maybe I should head over there and stir up some business,” Smith said.
