ATLANTA — When a company goes public, everything changes. And if there isn’t careful planning and adjusting done on the front end, the results could be disastrous.

That’s the message that Rick Randall, president/CEO of TranS1 (Wilmington, North Carolina), delivered to a room-full of med-tech company executives during last week’s Southeastern Medical Device Association (SEMDA; Norcross, Georgia) conference at the Ritz Carlton.

Randall could speak authoritatively on the topic because of his recent first-hand experience with going public. TranS1, a company he has been at the helm of since 2002, late last year raised nearly $90 million in an IPO, making the CEO the very first SEMDA alumnus to go public (Medical Device Daily, Oct. 22, 2007).

TranS1 is focused on developing minimally invasive surgical procedures for treatment of low back pain.

Plans for the company’s public offering were being developed at a time when healthcare was making up nearly 22% of all IPOs, according to slides presented by Randall. This constituted a significant rebound, he said, since 2003 was the “worst” year for med-tech and healthcare IPOs collectively, when hardly any were filed.

“An IPO is a validating event,” Randall said. “It was unbelievable how you’re viewed by surgeons and other competitors. You’re seen in a different light.”

The company saw evidence of this during last October’s North American Spine Society (Burr Ridge, Illinois) conference in Austin, Texas. Its go-public put a huge spotlight on the company, and as a result it began fielding more questions and getting more feedback. Randall said that the company was definitely in demand during the conference.

But going public almost didn’t happen.

TranS1 made its IPO filing around the time when the subprime lending issue were beginning to dominate the nation’s headlines and the U.S. economy was beginning to take a downward spiral. The conditions for going public successfully seemed to range from bleak to dismal.

Then something important happened. Spinal device maker Kyphon (Sunnyvale, California) merged with Medtronic (Minneapolis) in a deal valued at $3.9 billion (MDD, July 30, 2007).

“That was huge for us,” Randall said, referring to the Kyphon/Medtronic linkup. “We had people that had all this Kyphon stock that were days away from looking for something else to invest in.”

And once the “trigger” for an IPO has been “pulled,” the life of the company and of the CEO changes dramatically, Randall said.

Among these changes are a variety of negatives, he acknowledged – those things that make going public a bit difficult.

“Get ready for major changes in staff,” he said. “People who did the heavy lifting walk out of the door. Sometimes they want to go back to smaller companies – it happens.”

The company also saw a major shift in its operations.

No longer could TranS1 operate as a quiet med-tech, left to its own devices. Now it had shareholders to answer to – especially inquiries requiring detailed reports of financial activity. Randall quipped that there were “suits” in the building on a daily basis – for what reason, he didn’t know.

“It’s a definite distraction for management,” he said. “I had to abandon the business and day-to-day operation – most of my time is spent dealing with shareholders and the public. I recommend if you’re thinking of filing for an IPO then look at least a year in advance at a strong management team. Look for an experienced CFO ... .”

But he said the positives of the move outweigh the negatives.

An IPO “has the ability to give you access to large amounts of capital,” he said. “It also provides liquidity. Obviously the more money you make from an IPO the deeper your war chest,” allowing you to develop more innovations.

Currently TranS1 is delving into its chest to develop a trans-sacral approach to lumbar surgery. It will feature percutaneous access and fusion system, which would enable lumbar fusion to be performed with complete preservation of the annulus and all paraspinal soft tissue structures.

The company also is developing two mobility platforms: a disc replacement as well as a prosthetic disc nucleus, all delivered through this percutaneous, trans-sacral approach.

In the end, Randall fully endorsed going the IPO route. He just urged caution and warned companies not to become gobbled up by the process.

“In summary I believe it’s the right way to go,” he said. “It’s a disruptive process but if you have the right team in place then it can work for you.”

TranS1 is traded on Nasdaq under the symbol TSON.