You Don’t Have to Beg Institutions and Broker Dealers to Sell Your Private Placement Offerings.
If you believe the public would buy shares in your company, you can take control of your destiny and “take your company public.” A direct public offering is an initial public offering (IPO) where the company is its own underwriter. It isn’t cheap, but the $65-$90k price range is relatively inexpensive when you consider the control it provides in managing your company’s financial destiny. You may not be familiar with the direct public offering process, but many well known companies such as Ben & Jerry’s Ice Cream, Costco, and Tully’s Coffee have done it very successfully.
Like many companies, you may have already utilized your personal financial resources and exhausted friends and family capital. In such cases, most companies have to resort to soliciting (actually “begging” is a better description) institutions and broker dealers to sell their offerings. Unfortunately, these distribution resources are so picky that many company owners and officers begin to question the worth and viability of their business. It is generally a daunting and demoralizing task because of the amount of rejection involved in the process.
Utilizing the services of our firm to take your company public through an IPO will permit you to “control your own destiny” in spite of the naysayers. The IPO process will involve a few months of legal and regulatory processing but we will manage this entire process for you and we maintain a highly experienced securities law team. The direct public offering process that we are introducing here is somewhat different from the traditional IPO approach that is commonly used to offer a new company stock to the public markets. The traditional approach generally involves an investment bank agreeing to sell the newly issued securities on a best efforts basis. If you are a small company, however, it is unlikely you will be able to secure such a relationship.
On the other hand, with a self underwritten IPO, even for a startup company, you can benefit from the following exceptional marketing advantages:
1) Your organization will be able to “cut out the middle man” – the institutions and broker dealers. You also avoid the demeaning process of begging them to invest in your business.
2) You can appeal directly to the public at large in ways that you could never imagine with a private placement – with a public offering you can advertise your investment
offering it directly to investors through TV, emails, and other forms of powerful advertising.
3) You aren’t limited to selling to accredited or high net worth investors – you can sell to non-accredited “regular” people.
Although the IPO process offers potentially exciting advantages, the ultimate test of whether it is a fit for your organization should be the answer to the following question: Do you firmly believe that if the public, at large, had access to your company’s offering through general solicitation (direct mail, presentations, radio, tv, other media) that a sufficient number of investors would be excited enough about the offering to invest? Next, do you firmly believe that the investment in your company has to be substantial enough to eventually justify the financial expense of the IPO? Try to pull ego out of the analysis. As a comical example, going public just to be able to say at the country club that you are the President or CEO of a publicly traded company is generally a bad idea. Additionally, besides the one time filing fee mentioned at the beginning of this information piece, there are annual accounting and legal fees that will be incurred. However, if through a direct public offering you are able to raise the capital you require to take your business to the next level, those fees are frequently incidental. Below is a list of some of the many companies that have used this vehicle to raise capital.