Going public in this manner is ideal for companies that may not be large enough to attract an underwriter for an IPO and those that don't need to raise capital immediately. They want to go public because of the many benefits that being a public company offers such as increased valuation, using public stock as currency to acquire other companies and assets, liquidity, prestige and to reduce the need for expensive venture capital and other financing sources. It also makes it easier to raise capital since once you become public it gives you credibility and a benchmark trading price to raise capital against.
Public companies are typically valued higher than their private counterparts. So, what many sophisticated CEO's and CFO's do is go public without simultaneously raising capital and thus receive a higher valuation and benchmark stock trading price. Then, as a public company, they do a private placement at a deep discount to the market with the provision that the investors hold the stock for 1 year. That is why investors get the discount from the open market trading price.
As an example, a company goes public without initially raising capital and begins trading on the open market at US $10.00 per share. An individual can go on the internet or walk into any stock brokerage firm and buy stock at $10.00 per share. Public companies in this situation often sell stock in a private placement at a very substantial discount to the open market price (in this example, perhaps $5.00 per share). The investors agree to hold the stock for a period of time. (The issuers can sell the stock themselves or have small broker/dealers assist them.) Because investors can buy the stock at a deep discount to the open market price it give them quite an incentive to invest. Thus making it easier to raise capital.
This is extremely valuable and a very helpful tool when you are raising capital. It may help some to re-read the above example to fully comprehend how it makes it easier for you to raise capital. The president of our company is a very experienced Securities Attorney.
We assist companies in going public on the NASDAQ, the NASD OTCBB (National Association of Securities Dealers Over the Counter Bulletin Board) or the NQB (National Quotations Bureau ? Pink Sheets).
In fact, if a company is interested in Going Public they may want to begin trading on the Pink Sheets. There are NO audits, NO periodic SEC reporting and they do not have to deal with Sarbanes Oxley. It also is very fast and relatively inexpensive. A company can initially begin trading on the Pink Sheets if they want to become public quickly and, if they choose, can trade on the OTCBB later very easily.
Andrew Green RMI Services http://www.reversemergersinfo.com/ info@reversemergersinfo.com
For better or worse, most option trading investors purchase stocks... Read More
Six or seven years ago, the stock market was booming,... Read More
Unfortunately, many investors who are seduced by the lure of... Read More
Asset allocation is a critical component of investing success. Both... Read More
The American Jobs Creation Act of 2004 imposed strict new... Read More
Ready to start playing with your money? Not interested in... Read More
I am good at a few things. I can certainly... Read More
Many Young people live for Today. They really don't fully... Read More
Here are some useful tips on investing. When you make... Read More
Has your broker ever told you that a stock is... Read More
Some time ago I attended a seminar where participants were... Read More
Location ? Once the holy grail only for real estate... Read More
When you invest, it simply means that you are putting... Read More
Whether you're a novice investor or an experienced stock picker... Read More
The man sat in a chair beside a dressing room... Read More
What CA Needs To Do To Address Issues in FranchisingWe... Read More
Over the long term stocks have provided us with great... Read More
Press releases are a means through which companies can keep... Read More
Sales Leaseback compared to traditional property investmentCan a Sales Leaseback... Read More
Even though inflation has been relatively quiet in the U.S.... Read More
People tend to feel sorrow and grief after having made... Read More
The cries are heard from the distance, "I need help... Read More
If you want to make the most of your personal... Read More
Here is a small summary of the three major approaches... Read More
No matter how much money you make, it pays to... Read More
The following lists of questions are suggested questions to ask... Read More
Putting Rare Coin Market Cycles to Work for You...Until recently... Read More
Its only been about 5 years since we had major... Read More
"All human power is a compound of time and patience!"... Read More
In less than four years, the price of oil has... Read More
Let me start by answering that question...if an annuity fits... Read More
There are many different ways to invest in world markets:... Read More
One of the greatest preconstruction investing issues that I hear... Read More
A SEP is a special type of IRA. Under a... Read More
JewelryThe advantages are:? Gold Jewelry is the easiest of the... Read More
There is a lot to know about investing. It all... Read More
For those accustomed to viewing things a certain way, it... Read More
If you own a company that sells complicated products and... Read More
When raising capital for a business venture, warrants are a... Read More
The Light Crude Continuous Contract fell from $67.70 a barrel... Read More
If you know next to nothing, how do you go... Read More
Angel investors are individuals who invest in emerging business ventures.... Read More
Ready to start playing with your money? Not interested in... Read More
You've probably heard about people who keep their money offshore.... Read More
Ever since the turn of the century, world stock markets... Read More
You have probably been hearing, seeing and reading that real... Read More
We have all heard that slogan that started back when... Read More
The American Jobs Creation Act of 2004 imposed strict new... Read More
One of the greatest preconstruction investing issues that I hear... Read More
The Light Crude Continuous Contract hit an all-time high at... Read More
It always amazes me how much stock market investors resemble... Read More
Margin is one of those things that novices find puzzling... Read More
Have you often wished you could have got in on... Read More
First and foremost, an opportunistic strategy for creating wealth in... Read More
In less than four years, the price of oil has... Read More
Recently, my family and I took a trip to Maine... Read More
Do you think you need an Investment Advisor? Hold on... Read More
The inventory of the typical store represents the largest single... Read More
Investments can be a source of great potential earnings. The... Read More
If you've decided to stock some money away in a... Read More
Can you concisely summarize your investment philosophy in a few... Read More
Many people today are looking for annuity help. The biggest... Read More
Let me start by answering that question...if an annuity fits... Read More
Here is a small summary of the three major approaches... Read More
Typical day traders and swing traders look for stocks with... Read More
It caught my attention when I heard an analyst on... Read More
Investing |