The Isolated Offering, Vol 10, Issue 7
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The Isolated Offering
A Newsletter of The Lebrecht Group, APLC
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| August 18, 2010 |
Volume 10, Number 7
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| In This Issue
Can Your Company Afford to Become (Stay) a Public Company? … can It Afford Not To? – Part II Can Your Company Afford to Become (Stay) a Public Company? … can It Afford Not To? – Part I
Broker-Dealer Due Diligence Responsibilities in Regulation D Offerings Investor Relations – Why We Need It. Free Fallin’ – From NASDAQ to the Pink Sheets Securities Clearing Firm, Brokerages, and the DTC: Roadblocks to Small Business Capital Smaller Reporting Companies and Section 404(b): Where are We?
View LinkedIn Profile for Craig V. Butler, Esq. Contact Us http://www.thelebrechtgroup.com 9900 Research Drive 406 W. South Jordan Parkway
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Can Your Company Afford to Become (Stay) a Public Company?… Can It Afford Not To? – Part IIThis article is the second in a series of two articles, the first of which originally appeared in the June 2010 issue of The Isolated Offering. The first article (which can be found here: http://www.thelebrechtgroup.com/index.php/publications/tlg-publications/199-can-your-company-afford-to-become-stay-a-public-companycan-it-afford-not-to) discussed the current financing opportunities that public companies have available over private companies, which is the primary reason many smaller companies are currently considering going public. This second article takes a look at the costs for a private company to go public and then the cost of being a public company, so companies considering going public to take advantage of certain financing options can determine if the possible financing options are worth the price of being a public company. It should be noted that these articles are not meant to encourage private companies to go public merely for the financing opportunities, nor is it meant to discourage companies wanting to go public from going public due to the costs involved, but are merely meant to inform companies in those situations so they can determine if becoming public company is worth the cost of being a public company. It should be noted the legal costs referred to in this article are the costs charged by The Lebrecht Group, APLC; the charges for the other services are estimates based on what we typically see in the space. Certain charges, especially for audit fees, will differ depending upon the various factors, primarily the nature of the business of the company and the location of the business and its operations. How much does it cost to go public? For the purpose of this article, we are going to assume that companies are going public one of two ways, either a direct initial public offering (“Direct IPO”) or a reverse merger. Under a Direct IPO a company with the requisite number of shareholders files its own registration statement with the SEC to register its common stock, then a 15c2-11 with FINRA to get on either the OTC Bulletin Board or another exchange, and then applies for DTC eligibility. In a reverse merger a private company merges with an existing public company resulting in the private company becoming a publicly-traded company. There are other ways to go public, such as an underwritten IPO (a traditional IPO), but since most smaller companies do not go public in these ways this article will only focus on the costs associated with the above two primary methods of going public. [more]
Can Your Company Afford to Become (Stay) a Public Company?… Can It Afford Not To? – Part IThis article is the first in a series of two articles that will analyze the financial costs to be a public company, and the financing opportunities that public companies have over private companies. The impetus for both articles is the simple fact that the primary reason many private companies are considering going public in the current marketplace is access to financing. In order to properly make this decision companies should know both the cost of getting and being a public company, as well as the typical financing options that might be available to them. As these articles will discuss, while there are several financing sources available to public companies that are not available to private companies, each company needs to determine total “cost” of this financing, including the costs of being a public company, in order to determine if being a public company is the proper direction the company should take at this time. The first article looks at financing opportunities available to public companies that are not usually available to private companies. The second article, due to be published in the August 2010 edition of The Isolated Offering, will take a look at the costs that it takes for a private company to go public and then the cost of being an existing public company, so those companies determine if the possible financing options are worth the price of being a public company. It should be noted that these articles are not meant to encourage private companies to go public merely for the financing opportunities, nor is it meant to discourage companies wanting to go public (or those that are public to go private) due to the costs involved in being a public company, but are merely meant to inform companies in those situations to determine if becoming or staying a public company is worth the cost of being a public company. [more] |
