Durango-based Mercury, a fast-growing payment processing company, has filed a confidential statement with the U.S. Securities and Exchange Commission that could lead to an initial public offering.
The confidential draft registration statement submitted Friday allows Mercury to undergo a private review ahead of a public SEC filing. The statement typically includes a signed audit report.
Mercury spokeswoman Marie Rotter said the company could not comment beyond a short written statement. An SEC spokeswoman said the agency cannot release the document until a company opts to go public.
Mercury is one of Durango’s largest private employers. The company has 650 employees, including 377 in Durango. Mercury also has a large Denver office.
Mercury was founded in 2001 by Marc and Jeffrey Katz. The company processes credit- and debit-card transactions across the U.S. and Canada, and it has pursued a foothold in the mobile-payments market. It also offers gift cards and loyalty programs to its merchants.
If it decides to go public, Mercury would become Durango’s second locally based public company after Rocky Mountain Chocolate Factory.
Mercury going public can only benefit Durango, said Gary Masner, a retired partner of two Silicon Valley venture capital firms who now works in business development in Durango.
“Any time a company can access additional capital, it just strengthens their future,” he said.
The funding could be used to hire more employees or acquire other companies. New employees might not necessarily work in Durango, but some likely would, he said.
Jim Mackay, a local business consultant who formerly served as vice president of marketing at Mercury, said the company could use the money to innovate in alternative payments or essentially buy more market share through acquisitions.
The payment-processing industry is facing lower margins and competition from new forms of payment, Mackay said.
Durango’s economy could also benefit from Mercury owners who still live in Durango becoming flush with cash, said Masner.
“It’s a positive move, and it’s great for Durango,” he said.
Mercury’s next move will likely be a “road show,” where the company pitches to large institutional investors. In addition to drumming up interest, the road show typically helps companies determine how much stock to offer and at what price.
An offering could be months away, Masner said.
“Hopefully we’ll see something within six months – I’d say a year at the outside,” he said.
In April 2010, Mercury sold about 60 percent of the company to Silver Lake, a private-equity firm based in Menlo Park, Calif.
Silver Lake has a long track record of taking technology companies public. Its other holdings include Dell, Go Daddy and Groupon.
Masner said Mercury and Silver Lake appear to be moving quickly.
“If they go public, it would go down as a very successful investment for Silver Lake because it hasn’t been that long since they’ve held the investment,” he said.
IPOs allow companies to sell stock to the public on exchanges such as the New York Stock Exchange or Nasdaq. And typically, they accomplish two aims: raising money for the company’s future growth and providing an opportunity for owners to cash out.
IPOs have made a comeback after poor economic conditions in 2008-09, said Mac Clouse, a professor of finance at the University of Denver’s Daniels College of Business.
“Right now, there’s a much more favorable market for IPOs,” Clouse said. “It’s a sign that people have a bit more confidence in the economy, and people are willing to spend on shares,”