S1 Lawyers – How To Spot The Ones That Will Make Your Nightmares Come True

I deal with S1 attorneys all day every day and most of them are entrepreneurial, hard working and interested in helping you in any way they can but there are also a lot of bad ones out there. If you are taking your company public the last thing you want is a broke as a joke s1 filing agent.

I recently had the misfortune of working with (for a very short time I might add) a New Jersey lawyer who had us all convinced by her pepper gray hair and fluency of legal jargon as a second language and quick calls to what she had us convinced where big shot investors who had millions to put into this and other transactions we brought her way.

During initial negotiations she and I sat down in a coffee shop and went over her equity position and fees in the transactions that she’d be working on for us and it was pretty simple and straight forward. I would have my team organize and structure the company and transaction and she would simply file the s1 in exchange for 2% to 3% equity. Pretty nice payday for minimal work and gaining equity in an average company producing $5m+ per year.

Ah yes, but when it sounds too good to be true it is and when it seems too easy of a negotiation…it is! When she sent us the contract she felt the need to add a few percentage points to the tune of 7%, making a total of 10% equity and she also was charging an extra $10k to fill in the blanks on your prototypical PPM doc. Why did she jack up the price? Her response was, “This S1 will have comments”. I almost died laughing. Of course it’s going to have comments with the SEC, that’s why it’s called the ‘comments’ stage.

We talked her into taking 2 payments for the $10k, half upfront and half on completion but we really should have dumped her right there. She didn’t want to keep her word on that either so I paid her the last payment before the fee was due and just got rid of her.

Turns out she never filed an s1 before and her whole act was a sham. She was desperate for cash and nickled and dimed us the whole time. I laugh about it now but it wasn’t funny when it happened. We lost over a month of transaction time because she couldn’t tell the truth.

The client was going public on the OTCBB with a valuation of around $5m, her suggestion was to raise capital pre public for $1 per share because the company would have a hard time qualifying for the NASDAQ if it started at anything less than $1. This company was years away from even considering the NASDAQ as an option but her in experience and need to prolong the deal to rape us for fees was so blatant and careless that she did everything she could to add as much confusion to the deal as possible so that no one knew what was going on, therefore she got away with a lot and was able to pick our pockets for weeks before we got rid of her.

The moral of the story is this: not all attorneys are rich. The truth is, most are very modest as far as their earnings. There is too much competition these days so there are predatory lawyers out there that will lie, double talk, triple talk and run you around in circles. All the while the clock is ticking and they are billing you like it’s going out of style. Watch your back with the dead broke S1 lawyer.

Taking A Company Public – S1 Lawyers – PCAOB Auditors – Investor Relations – Advice for New IPO Consultants
As a strategies consultant my firm deals with IPOs on every scale whether we are the lead group on the project or not. Sometimes we run the project and put our own team in place, others we are part of a team for another consulting firm. One thing that I’ve learned is when is our project we need to take the ‘lead role’ because at the end of the day everyone just sits staring unless they are given exact descriptions of what needs to be accomplished and in what timeframe.

In a perfect world I could send instructions via telepathy from my armchair recliner but for now I need a cell phone, laptop, conference line and plane tickets. The second thing I’ve learned is to create new relationships with caution and to protect the relationships that I have in place. To do this I have found myself turning down twice as many projects as I take on and as time goes on I’ve made myself less available for new consultant relationships that I did earlier in my career.

The objective is to retain and strengthen relationships as opposed to burning and creating relationships. This industry is polluted with fly-by-night, wannabe consultants that will drop your name like crumbs from a table and at the end of the day when they are off selling printers or franchises, you’re left piecing together the shattered remnants of your once flawless relationship. Here is a word of caution for new consultants trying to break into the world of IPO facilitation, corporate strategies and mergers and acquisitions, watch your back.

If you’re doing an IPO don’t jump at every deal that comes your way; instead, stand back, examine the deals being pitched to you and slowly progress from there. Don’t rush. If you’re being contracted to orchestrate an IPO on the OTCBB, after you’ve examined the deal, checked for holes in the business model, UCC filings, corporate liabilities, executive pedigree and the other basics, consider the team you’d put together. A public company is nothing without a market so I will typically start with evaluating the investor relations strategy.

This is a relationships business don’t go blind, get IR referrals from good sources and check previous trading symbols and references as Investor Relations companies are typically run by Florida based, ex-stock brokers who got their licenses snatched from them for fraudulent activity. Obviously you’ll do the corporate strategies, structuring, board of directors selection, strategic alliance and globalization in house so the next team member you need is your S1 comments team. This will be a law firm, don’t hire a consultant that claims to be able to do it on their own.

A good consultant will have the client’s best interest in mind and a lawyer with a license to practice that could be jeopardized by stepping out of bounds is the best way to keep the process in check. I can’t tell you how many times I’ve brought on an s1 attorney who seemed promising and turned out to be a back stabbing scumbag. The reality of having to change out your s1 attorney on a project is 50/50 the key is to do this before the s1 is filed so you don’t lose time and take on liabilities that are not necessary. You’re going to need to change out members of your team during the process, this is just a fact but the strategy is to change out these individuals before it’s time for them to step up and initiate their part of the deal. With an s1 attorney it’s good to get them started with a PPM (private placement memorandum/regulation d 504, 505 or 506) review. You can test their interaction with the client, other consultants and see if they are trouble makers. It’s at this point you’ll be able to test their ability to work under stress, their speed and work ethic. The s1 attorney should be the referring agent to the Market Maker for the 15c211 filing with FINRA if you’re new to the business.

Good s1 filing agents are constantly being lobbied by Market Makers and should have a file of options ready to go. A good consultant will stay in for the long haul to help the company grow. You should stay on to help your client keep the board in check as well as assisting them with growth strategies. Identify potential acquisitions and mergers and build relationships on behalf of your clients via strategic alliances as your portfolio of contacts grows.

Take care of your client and protect them. You’ll often times be the bearer of bad news and this is never easy. Accept constructive criticism but never stand for unprofessional venting with profanities and blatant disrespect from anyone. Don’t get emotionally involved with your client’s business, it’s their company, not yours so at the end of the day don’t take it personal if they bring on a new consultant or seek a second opinion. Relationships will come and go, clients will come and go but at the end of the day, when you’re sitting at your office chair, the room is quiet and you’re all alone all you have is your peaceful conscience and your integrity, don’t jeopardize either one.

S1 Filings and Those Darn S1 Attorneys: Let the Battles Begin

Wouldn’t it be great if you could take a lawyer based on their word? Right now you’re thinking, “is this guy crazy?” because the mere concept of trust has become a laughable concept. Some attorneys will tell you what you want to hear and when you get the contract which puts in writing everything that you discussed it’s like the attorney wrote it in pig Latin, hand jive images and Hindi. Nothing is what it was on the phone call and everything gets lost in legalizes technical jargon.

Now lets get a little closer to home. Your company is growing and you need to raise capital. The banks want suck the life out of you and the venture capitalists love the opportunity but will need a pound of flesh, a pint of blood and your first born in order to part with their capital.

Where do you turn if you just want a square deal to use the strength of your company and your track record of success to raise capital? The answer is simple, go public. Pick a solid volume exchange like the OTCBB (Over The Counter Bulletin Board) and get things moving. Use a consultant to guide you through the flesh cutters and blood suckers who will suck your company dry of equity and capital and when you are picking an Investor Relations firm get their latest symbols and a few references and start your research there but when it comes to the S1 Attorney, those gosh darn S1 attorneys, approach with extreme caution.

Get a solid grasp of their background. Do you have professional chemistry with them? Interview several securities attorneys before making a decision; get trading symbols and edger links. How many rounds of comments do they average with the SEC? Will they support or block your consultant from doing his/her job? Are they confrontational? Take all these things into consideration and then when you’ve decided on an attorney the last thing you need to make sure they do is make sure that they can get you set up with a market maker for your 15c211 filing. If the lawyer says that this isn’t their job, you tell them, ‘Think again Paunchy’.

A good filing attorney will always get lobbied by market makers and they should have contacts in spades. We all have our nightmare stories about dealing with S1 lawyers who screw up deals, prolong deals, change deals, swindle clients and will put a company through the ringer for a year and in the end can’t even get through SEC comments. Do your research, get referrals and get informed.

S1 Attorney – S1 Lawyers – Taking A Company Public – How To Get Rid of A Bad S1 Attorney
Ok so your company is growing and to keep that growth perpetuating you need capital. You’re a solid business; you have nice profits, hey, why not take your company public? Just get a structuring consultant, PCAOB auditor, line up your post public investor relations and don’t forget to find a good S1 filing attorney that can get back to the SEC during the comments phase and get you to FINRA for a trading symbol ASAP.

You meet with the attorney; she’s a sweet little old lady in her late 50’s. She tells you how great it is to work with you and she loves your company. You decide her office is too far for your first face to face meeting so you meet her at a slurpy shop. She gets a large orange tasty freeze, you get pineapple and she grabs the bill and there you sit, slurping away as you chat about how your company is about to go big time. First you’ll conquer the OTCBB, then the NASDAQ blah, blah, blah.

You get to the awkward part of the conversation where you start to discuss fees. She tells you she loves your deal so much that she’ll do it in exchange for straight up equity, 3% of the company and she’ll even throw in 10k and 10q filings and general contract review for one year after you go public at no additional fee. After all, your company is worth $10 million, you’ve spent 9 years building the company; it seems she appreciates that and you grab the contract and feverishly sign and initial all pages. You slap the pen down, take one last gulp of the, now melted, pineapple tasty freeze and you slap hands, heck you run around the slurpy shop throwing high fives at anyone willing to get into the madness.

You drive home with dollar signs in your eyes and a week later you get the ‘real’ contract, you realize that what you signed in the slurpy shack was just a letter of intent and this paperwork has numbers that you never discussed such as ‘10% equity’, ‘$10,000 PPM Fee’, ‘DPO’, ‘100% Restricted Shares’. You think there is a mistake so you reach for the phone to call this sweetheart lawyer who bought you that luscious slurpy to remind her of your conversation about 3% equity, no upfront fees, IPO and Free Trading Shares. You dial the number on her business card “beep, beep, beep” ah nuts you called the fax number. you dial again and this time you get through, she picks right up and says in a sweet voice, “oh how are you? I was just talking about you to my neighbor with Alzheimer’s and a lazy eye from her recent hip replacement surgery which was supposed to be a consultation for an eye exam so she could get contact lenses…”.

You tell her that you got her invoice and there must be some mistake, “oh no mistake sweetheart, those are my fees” she says. “But you told me something completely different at the Slurpy Shack! You told me that I only had to give up 3% of my company to your firm and that there were no additional fees because of the revenues from my company and that we would do an IPO instead of a DPO because I needed capital to run my business post public”.

“Oh I’m sorry”, she says, “those are my fees, your deal will take a little more work than I thought”. You look at the phone and hang it up. You’re dreams are shattered, you just paid off a big line of credit so you don’t have the $10k and you can’t give her 10% instead of 3% that just doesn’t make sense and why in the heck would you do a DPO when you need the capital in the public markets to fund your business in a way that only an IPO can? This attorney just doesn’t get it. Instead of giving you what you need, she’s giving you what her limited technical capabilities enable her to give. She doesn’t even know how to do an IPO, only DPO’s and she needs the 10K upfront because she’s not even writing the PPM, she’s outsourcing that. She lied, she misled you but hey, all is fare in love and S1 filings.

Congratulations! You’ve just been through ‘S1 Attorney 101’. Believe none of what you hear and half of what you see and when you get a great deal with from an S1 filing lawyer, pinch yourself because you’re only dreaming.