Is Your Company Ready to Go Public?
By William Cate
Published November 1998
[http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
You're not ready, unless you can afford to go public. Do you have
the money? If you don't have the money, where do you expect to find it? You
should budget about $1.25 million to do an IPO (Initial Public Offering).
You can buy an OTCBB Trading shell with 90% control for $450,000. You
should add another $250,000 to cover your SEC S-4 Filing costs and your
"Due Diligence" evaluation of the shell. You'll need a way to do your
Private Placement financing once your S-4 gets by the U. S. Securities and
Exchange Commission (SEC). You can do a spinoff. It costs $250,000. I
arrange an Offshore Private Placement financing for my spinoffs. If you
can't pay to go public, you aren't ready to go public.
Until your company is making money, you aren't ready to go public.
Cash flow is credibility. If your company lacks credibility, it's hard to
find investors and shareholders. Stock hype is a dangerous way to try to
build your startup company.
A public company can attract shareholders from wherever it sells
its products or services. Until your company's product or service has a
regional market and preferably a national market, you aren't ready to go
public. Investors who can't see that your product or service is locally
available won't invest. This is the reason that a local department store,
restaurant or fun park can't attract national investors.
Can your management team grow your company? If not, you aren't
ready to go public. Your management team is your key to effectively using
your equity financing. If they lack the relevant education and work
experience, the odds of your company's success don't justify taking your
company public.
Unless your company needs money to grow, you aren't ready to go
public. The public process adds another level of costs and responsibilities
on your management team.
To contact the author: Visit the Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit the Global Village Investment Club Website:
[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
About the Author
He has been the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] since 1981 and is the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]