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Doughnuts fill market hole

Issuer: Krispy Kreme DoughnutsDeal: IPOAmount: $72.5 millionDate: April 5 2000Bookrunner: Deutsche Banc Alex Brown

When Scott Livengood took his company public last year, he had two distinct advantages over most other issuers. First, he wasn't a technology or internet company: shares in many of these companies were in near free fall, and would remain volatile for the rest of the year. But Krispy Kreme Doughnuts is a well-established company - it was founded in 1937 - with two distinct characteristics often missing from tech and internet companies: earnings and profits.

And the timing of the IPO, in retrospect, could not have been better. Just a month before the Nasdaq Composite index peaked at over 5000 points, but within a couple of weeks was dropping rapidly. Investors' blind infatuation with internet and tech stocks was coming to an end. And here was a well-established franchise with solid revenues and a good growth story to tell to take up some of the slack.

That's easy to say now, of course. At the time there was serious thought given to postponing the deal as the market seemed to be too volatile. The deal was priced on April 4, the worst day of the year for the equity markets. The Nasdaq, where Krispy was due to list, fell over 600 points that day, while the Dow Jones fell 500 points.

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