When companies contact us about going public they will typically start out by saying something like, “I’ve been watching your videos and have been following your company in the media for a while now” or “I’ve been reading your articles about globalization and going public over the past few months and…”. My point in stating the above is this, I’ve never had a company that calls and says, “We were going to get a corporate line of credit but figured we’d go public instead”. Companies that are going about this the right way will have spent time preparing their company to go public and they’ve taken the appropriate initiatives to set up post public finance options, investor relations and other efforts that are conducive to their company performing in the aftermarket.
As an IPO consultant it’s not my job to sell the company on why they should go public. It’s my job to question their motivations and play devil’s advocate to try to test their theories and inject factual information that will either make them more confident with their decision or talk them out of taking this path. Proceed with caution. If you get an IPO facilitation firm on the phone and they are absolutely in love with your company, idea and plans from the onset of the conversation, chances are you’re going to regret it in the end as this consultant has too much time on their hands and sees an easy ‘fee oriented’ target.
Going public is a mutual effort and can only work if both sides are going to make out financially in the end, not upfront. Consultants that charge front heavy fees are typically not going to be around in a stabilization or advisory capacity once you are public which means you’ll almost certainly fail to raise the public capital you’re seeking. Instead, find a consultant that levels out their fee structure with a general retainer fee and most of the compensation on the back end. Retainer fees of $40k to $50k are common among established and legitimate consulting firms. You’ll also have the PCAOB audit which will range from $10k to $30k and the S1 filing and comments fees for legal should be tied into the back end with some general expense compensation during the process. Your market maker attachment and 15c211 filing should also be included in back end equity by the consultant.
As far as equity compensation keep in mind that if a consulting firm wants to take all upfront fees and makes no mention of the post public equity distribution then they are taking you on as a client for the wrong reasons. If they believe in your concept and truly want to get involved to assist you in a well rounded, strategic offering they will insist on an equity stake of 5% to 20% depending on how much pre public structuring and strategies as well as post public work must be done.
In going public your company can become a globalized, stable industry powerhouse but attaching yourself to the wrong facilitator upfront can damn your efforts before they begin. Find a well published, full service consulting firm that will take control of the situation so you can focus on your business and not have to worry about the intricacies that can destroy your offering potential.
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Lets face it, if you are a small or medium size business owner, the government looks at you and sees dollar signs and instead of words coming from your mouth they just hear ‘cha ching’! Don’t be naive you mean about as much to your local congressman as a slab of road kill to maggots.
They’ll feed off you as long as you’re willing to wear a blindfold and hand out pounds of flesh with yor IRS tax check and make sure you vote on time but don’t have an opinion and if you do have an opinion, keep it to yourself. Today’s politician has about as much integrity as a prison gang leader and zero patience or tolerance to actually digest the needs verbalized by their constituents and if you are a business owner just place your vote and shut up because no one is listening anyway.
Besides, you’re just a robot with your programming card hooked up to talk radio and the news and you’ll believe what the system tells you to. They say that the bailout money is to jump-start the economy and you believed it but now your company is going under, you can’t make payroll and your local senator and congressional rep are MIA.
Wake up, turn your head and cough, now cut your check and shut your mouth. Go back to your dirty little office at your 2005 archaic PC and get to work, Uncle Sam is watching you and you better perform because your tax liabilities are growing, your line of credit is maxed and there is no help in site.
What should you do when you have no one to turn to? Turn and look in the mirror and the solution is that half shaved bloodshot eyed pawn staring back at you. Now pull your shoulders back, pick up that chin and begin to move strategically. For every action there is a reaction and your industry is constantly moving as the government has placed you on a treadmill for the ultimate distraction so that you keep your head down and work without asking questions. But now look up and put a strategy together that will spearhead your growth and stability.
You should look at your fund raising options in a ‘private raise’ sense with an exit strategy that will keep capital flooding your bank account. Investigate the possibility of raising some capital with a Private Placement Memorandum (regulation d) and provide an exit strategy that will have investors flooding your crummy little office, go public on the OTCBB and offer investors the ability to trade without restriction. Now you’re obtaining real power. Next, look at your internal corporate strategy.
Remember, the less organized you are, the more control outside sources have over you because you can’t argue your case in a manner that is conducive to strength. Make sure that your financials are audited once per year, make sure that your company executives are actively seeking strategic alliances on behalf of your company and hold them to a quota. Diversify your product and service offering. Use publicity to advertise instead of traditional ads. Joint venture your promotional campaigns for maximum affect and minimal cash outlay. In these strange economic times you should be streamline, lean and mean. You should evaluate your employees twice per month as on a daily basis they need to earn the right to work for you. Put together a board of directors and qualify them by evaluating their contact base and track record, compensate them in restricted shares and offer some type of annual options. You should also have an advisory board that gets a modest share distribution but primarily uses their advisory board position to gain experience and to build their resume. Set goals for all the members and put it in a Board or advisor contract. Look at the possibility and realistic success of going public and if you go public, choose a solid pre NASDAQ structure such as the OTCBB. In going public your main job at that point is growing and stabilizing your share price with powerful investor relations, PR and growth through acquisitions.
You’re on your own, don’t wait on help that will never come. Find a consultant that believes in your concept and can help you build on the foundation you have. Globalize your expansion efforts as opposed to limiting yourself to a minute geographic proximity. Take control of your fate now!
Go Public with Reverse Merger , call Princeton Corporate Solutions at 267-233-0183 Expand Your Company Into China We Can Make Global Growth Happen For Your Company