What Are The Advantages To Taking Your Company Public? – PIPE Loans – S1 Filings – Corporate Expansion
Companies decide to go public for many different reasons: expansion, need for capital, exit strategy, acquisition facilitation, globalization etc. But what are the real advantages to going public? First, let’s go over the disadvantages. Your life becomes an open book and as an executive your spending habits and failures will be a matter of public information with your annual and quarterly filings. You’ll be accountable to shareholders. You’ll have a board whose main interest is the company and the shareholders no you or your need for a new luxury car, financial bonus or need for a quick loan from the company that was once possible and easy when your company was a sole proprietor entity. You need trading volume and without it your stock is worthless and your company becomes a blind, deaf, mute, quadriplegic (a bit extreme but you get the point).

The advantages are numerous if your company is ready for the public realm. With a solid trading volume, minimal dilution of stock, solid executive management, an active board of directors, powerful strategic alliances and the ongoing advisory of a strategies consultant your company can expand globally, identify and grow through acquisition and subsidiary mergers, purchase entities and services with stock to retain cash flow. Banks and other institutional lenders will make more funding solutions available. Your exit strategy is built in and turn-key.

The most successful public companies have a few common themes built into their infrastructure. They have recruited a proven and tested CEO, CFO and COO with professional pedigrees and track records that are recognized in the industry and media and will bring with them a strong following of partners and solution mechanisms that will typically yield instantaneous, empirical results on behalf of the company. The board of directors is restructured so that major industry enhancing components are represented such as industry niche legal, financial, distribution, domestic and international. Each of these board members will put their contact portfolio to work for your company for immediate and long term growth and stabilization. One other aspect that all prosperous public entities have is a strategies consultant that keeps everything in line. This individual is also what is referred to as a ‘fixer’. This professional will typically stand in the background constantly analyzing every aspect of the company for weak points and correct them. Whether it be a lazy board member, potential acquisition, CEO not pulling his/her weight, potential legal issues etc., this strategist has a keen eye and typically a massive contact base that, when put into place can correct virtually any situation quickly and seamlessly.

Going public is a great strategy for the right organization. Having all your ducks in a row pre and post public is the key to a successful offering and public markets longevity.

Take A Company Public: Questions To Ask Yourself Before You Start
When it’s the right time to go public and you’ve looked at the pros and cons from all angles, it’s time to move forward and structure the company so that you can have a corporation worthy of investment dollars. First look at your company structure.

Do you have a well pedigreed and economically seasoned CEO, CFO and COO? Is your board of directors composed of the best of the best that your industry has to offer? Do you have a secondary board of advisors to pick up the slack where needed? Do you have strategic alliances in place to make expansion easier via distribution access, cross promotion and other necessary processes that you’ll need in a post public setting?

What mechanism will you use to distribute shares for your pre public raise? Is your business plan a powerful, ultra effective strategy or is it a boilerplate template that every funding source has seen a dozen times before?

Next, have you brought on a consultant to analyze your company and check for leaks, perform a valuation and start the process of going public? Don’t be shortsighted by trying to do this on your own or listening to the wrong people. Unless you have a professional onboard to navigate you through the process of preparing and completing the going public process you’ll be doomed from the start.

Don’t look at getting a trading symbol from FINRA as the finish line as this is just the beginning of the battle. You need a presents now more than ever. Your consultant will help you identify PR and expansion worthy mergers and acquisitions while simultaneously strategizing with investor relations agencies for the most impact at the best price.

Going public and achieving a symbol is the beginning of a whole new set of opportunities to grow your company in ways that you could never have imagined but it’s also a massive responsibility that can sink your company faster than quicksand. Be prepared for the process. Hire a consultant and place the best people in positions around you and you’ll be able to move forward with the wind at your back.

Taking Your Company Public: The Decision And How To Prepare

When companies contact us about going public they will typically start out by saying something like, “I’ve been watching your videos and have been following your company in the media for a while now” or “I’ve been reading your articles about globalization and going public over the past few months and…”. My point in stating the above is this, I’ve never had a company that calls and says, “We were going to get a corporate line of credit but figured we’d go public instead”. Companies that are going about this the right way will have spent time preparing their company to go public and they’ve taken the appropriate initiatives to set up post public finance options, investor relations and other efforts that are conducive to their company performing in the aftermarket.

As an IPO consultant it’s not my job to sell the company on why they should go public. It’s my job to question their motivations and play devil’s advocate to try to test their theories and inject factual information that will either make them more confident with their decision or talk them out of taking this path. Proceed with caution. If you get an IPO facilitation firm on the phone and they are absolutely in love with your company, idea and plans from the onset of the conversation, chances are you’re going to regret it in the end as this consultant has too much time on their hands and sees an easy ‘fee oriented’ target.

Going public is a mutual effort and can only work if both sides are going to make out financially in the end, not upfront. Consultants that charge front heavy fees are typically not going to be around in a stabilization or advisory capacity once you are public which means you’ll almost certainly fail to raise the public capital you’re seeking. Instead, find a consultant that levels out their fee structure with a general retainer fee and most of the compensation on the back end. Retainer fees of $40k to $50k are common among established and legitimate consulting firms. You’ll also have the PCAOB audit which will range from $10k to $30k and the S1 filing and comments fees for legal should be tied into the back end with some general expense compensation during the process. Your market maker attachment and 15c211 filing should also be included in back end equity by the consultant.

As far as equity compensation keep in mind that if a consulting firm wants to take all upfront fees and makes no mention of the post public equity distribution then they are taking you on as a client for the wrong reasons. If they believe in your concept and truly want to get involved to assist you in a well rounded, strategic offering they will insist on an equity stake of 5% to 20% depending on how much pre public structuring and strategies as well as post public work must be done.

In going public your company can become a globalized, stable industry powerhouse but attaching yourself to the wrong facilitator upfront can damn your efforts before they begin. Find a well published, full service consulting firm that will take control of the situation so you can focus on your business and not have to worry about the intricacies that can destroy your offering potential.