What is an IPO, DPO and RTO?
These are three ways to go public. An IPO is an initial public offering, which requires an investment banking firm to underwrite the financing. A DPO is a direct public offering (our specialty), which follows the same regulatory path of an IPO but does not require investment banking firm participation. An RTO is a reverse takeover transaction where a private company merges into an already publicly traded company in order to become publicly traded itself. Our founder has helped clients go public via RTO, DPO and RTO. We are happy to discuss the advantages and disadvantages to each method.
How long does it take to go public?
It varies based on a number of factors, but it can be as fast as 30 days via RTO to as long as seven months for an IPO. We can generally complete a DPO in four to seven months.
What does it cost to go public?
It will typically cost $350,000 to $400,000 to complete a public listing in the United States and substantially less in Canada. The cash cost can often be reduced by paying certain fees with shares of stock. We have completed several DPOs for less than $100,000 in cash plus stock. While many third-party costs are fixed, the accounting and audit expenses vary widely based on the size and complexity of each transaction.
Note: Companies that don’t have the capital to cover the costs of going public are often able to raise funds from friends, family and colleagues in a “Pre-IPO” financing round.
What are the minimum requirements to go public?
While it is good for a company to be profitable before going public, there are no minimum revenue, asset, or profit requirements to meet to go public in the United States or Canada! We have represented complete start-ups to companies generating millions in revenue.
Who should go public?
Ideal candidates for becoming a publicly traded company will have an experienced management team with the highest level of ethics and integrity. The company will have clearly identified target markets, meaningful competitive advantages, and a strong desire to create shareholder wealth. Additionally, it is an advantage if the company has plans to grow through mergers and acquisitions or through the recruitment and retention of key personnel.
Don’t I need a brokerage firm or investment banking firm to take my company public?
No. In fact, many companies opt to go public through a direct public offering. In this type of public offering, private companies follow the same rules and regulations followed by companies who go public with an investment banking firm.
Won’t going public force me to give up control of my company?
While there are additional constraints on public companies that do not apply to private companies, it is rare for a small or medium sized company to give up control upon going public. When they do, it is voluntary, as management and their board chooses when to issue stock for assets, acquisitions or investment capital.
Will investors kick me out of my own company?
You’ve been watching too many movies. Entrepreneurs and executive management are generally removed only if they engage in unethical, immoral or criminal behavior. While investors are often upset when management teams fail to deliver the promised performance, they typically just sell their stock rather than move to remove founders or management.
Can our company raise money while the SEC is reviewing our registration statement?
You can raise money before or after a registration statement is filed with the SEC. However, you cannot offer debt or equity securities while in review, unless you are offering promissory notes that meet certain criteria, or are using an exemption that expressly permits raising capital while under review by the SEC.
Can your company raise money for us?
We do not raise capital for clients. However, we do have a list of investment bankers and licensed brokers who have expressed interest in evaluating our clients for financing after they become publicly traded. We cannot be part of any negotiations and do not earn a fee for introductions.
Do you provide investor relations services?
We do not provide investor relations services, but our founding managing member has investor relations experience and can provide you with general advice to design and implement a cost-effective investor relations program. Generally, we do not recommend that early-stage companies distract themselves with the time or capital needed to implement an effective investor relations campaign. We believe that companies producing increasing revenue and profits often attract their own investor following.
What valuation do you think we will have?
Our founding managing member was formerly a partner of a 700+ person investment banking firm and completed research, analysis, and evaluations on a wide range of companies. He was also an analyst at two money management firms. With sufficient information about your business, we can provide our opinion as to the likely valuation your company might have once traded. While companies going through a DPO process essentially set their starting valuation, market forces will ultimately determine your stock price.
What stock exchange do your clients trade on?
We can assist clients with trading on any U.S. exchange, including the NYSE and NASDAQ, as long as the client can satisfy the exchange requirements. Typically, our clients begin trading on the OTC QB and can upgrade as they grow.
Will you help my company go public?
If you demonstrate that you have a viable business, with ethical management that can implement your stated business plan, and have sufficient capital to cover all of the fees, then it is very likely we will represent you to become publicly listed. Contact us for more details.