HOW TO REALLY WIRE CASH

By Daniel Kadlec

Your dear lost cousin just crawled out of a swamp in Australia and needs cash. How ya gonna get it there? Western Union, probably. It's been a consistent choice in such situations. So would anyone really invest in a rival money-transfer company called MoneyGram, set to raise a hefty $230 million in an initial public offering of stock next week? Just watch.

MoneyGram is a David and Goliath story that serves as a useful lesson in understanding what happens in the IPO market when stock prices are soaring, as they are now. The lesson is this: anything goes. So-so companies are fetching top dollar from the public, while insiders and early investors head for the exits and Acapulco. Some 125 companies are waiting their turn at this sucker's market, readying some $3 billion in stock for initial sale. A record-shattering 799 companies have sold $47 billion in stock through IPOs this year.

MoneyGram isn't the worst of this lot, not by a long shot. But it'll be among the biggest and most aggressively sold. For legal reasons, the company faces a Jan. 23 deadline to go public. On the plus side: unlike companies with no revenue and barely more than a product design, MoneyGram has a real business. Last year it earned $18 million on revenue of $137 million. Earnings are down a bit this year, but money transfers are on the rise. It has 16% of the worldwide nonbank consumer-money-transfer market. But Western Union, the granddaddy of the wire business, claims 81% of the market. "Our big concern is Western Union's dominance," says Travis Farr, analyst at IPO research firm Renaissance Capital. But market dominance is only the start of what should concern would-be MoneyGram investors. A lot of savvy folks have looked at buying the company and, for whatever reason, said, "No thanks."

Not the least of those is MoneyGram's parent, First Data Corp., a big credit card-processing outfit that is the selling shareholder in the IPO. Last year First Data bought another data grinder, First Financial Management Corp., which just happened to own Western Union. The Federal Trade Commission took one look at the MoneyGram-Western Union union and said, Uh-uh. First Data would have to choose one and sell the other.

That was kind of like choosing between an apple and an apple with a worm in it. "If you're going to keep one of the two pieces, why not make it the one that is by far the market leader?" says First Data spokesman Don Sharp. And the point is, If Western Union is so clearly better, why should anyone invest in MoneyGram? Even before the company was rejected by other buyers, some of MoneyGram's biggest agent networks were fleeing. "It was like a piece of merchandise that didn't move, so we dropped it," says Tom Dingledy, spokesman for drug-store chain Revco D.S. Another defector, Greyhound Lines, struck a deal with, you guessed it, Western Union. Could MoneyGram carve out a niche and survive? Sure. But what are the odds it will really flourish? And at the proposed IPO price of $16 a share, or 21 times earnings, it isn't even cheap. But then, who's asking? In this roaring market, few indeed. Next up: the Brooklyn Bridge.

Daniel Kadlec is TIME's Wall Street columnist. Reach him at kadlec@time.com