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Money Rules

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HB: Although public markets are considered the prerogative of big companies, the SEC has a Web page for small businesses www.sec.gov/info/smallbus.shtml. So there is some outreach to small companies that want to go public. What advice would you give to Hispanic entrepreneurs who would like to go public some day?

Mr. Campos: If you're an entrepreneur, one of the great liquidity events [in your career] is going public. You need to think about it early. Once you decide to position a company to go public, you are accessing public monies, which means you have huge responsibilities to the public in terms of disclosure and following federal securities laws.

So you should prepare your company as much as possible. Have a professional board. Have a board with a majority of independent directors. Put at least one person with financial expertise on the audit committee. Then, first, you become more attractive and a lower risk for outside capital, and, second, you won't have a huge [challenge] in changing your culture when you go public. Because these are the rules you'll have to live by.

HB: Hispanic Business held a CEO Roundtable in New York on June 10. Several of the participants mentioned the idea of securitizing business loans for small or medium-size companies. They used the example of the home-mortgage lending market. Is that viable?

Mr. Campos: It's a very viable idea. But there are difficulties inherent with business loans. They don't share as many common features as mortgage loans a property as collateral and terms and interest rates that have become standardized. With the wide range of businesses, they have a wide range of assets. So there is a challenge to create a risk assessment for these particular loans. It's not insurmountable. What has happened [is] you have a few large syndications by finance companies that have sold [loan] pools. And you also see it in credit card debt, for example, where you have personal assets [for collateral].

Somebody has to come up with a business plan and get it funded, undertake a small portfolio, and show it can be done. What I think we really need and this would apply to the other minority communities as well, but I see it being done a little more successfully by the African-American community is our leadership going to the sources and pitching the business plan of raising capital. I'm talking about CEOs and people who have some celebrity from government service. And they should bring a few deals with them. I know that advocacy groups like [the National Council of La Raza] and others in the last 12 months have gone to various corporations and received significant contributions to their building fund, for example. That's terrific. But if that can be raised for a specific advocacy group, why can't we raise equity money that would have a return?

The New America Alliance and HACR [Hispanic Association for Corporate Responsibility] are interested in creating equity funds. Once that happens, I think we'll show much better progress. We have huge companies that "harvest" the Hispanic community, like Univision. They live and die selling advertising in Spanish for the Hispanic community. They should look to invest and support other ventures, because that increases their advertising base.

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