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Direct Public Offerings

What is a Direct Public Offering?

By going public directly through a Direct Public Offering (DPO), your company raises money by marketing directly to your own network or community. This could include employees, customers, suppliers and distributors. Unlike typical broker-dealer underwriting where shares are sold to the broker-dealer’s customers, a DPO sells shares to the direct contacts and prospects of the company itself.

What Are the Benefits of a Direct Public Offering?

A DPO has advantages over other Initial Public Offerings (IPOs) and Alternative Public Offerings (APOs) or reverse mergers. By offering securities directly to the community that matters to your business, your company has a much higher likelihood of raising capital. Those willing to purchase your securities are often aligned with your corporate goals and values, ensuring your business continues to operate according to your strategic direction. In addition, offering shares to those most committed to the business can help strengthen customer and supplier loyalty.

In addition, Direct Public Offerings are less expensive than traditional IPOs. They also avoid some of the onerous restrictions and costs associated with raising money through venture capital and traditional bank lending. They can be especially helpful for raising smaller tranches of needed capital.

Over the past 30 years, ReverseMergers.com, its principals and partners have assisted over 100 clients in both DPOs, APOs and strategic reverse mergers. Through this process our clients have raised millions through their existing customer, employer and supplier networks. We assist throughout the DPO value chain from start to finish, providing a “soup to nuts” approach to assisting with our clients’ public offering needs.

 

Determining the right approach to your company’s Direct Public Offering strategy will have a large impact on the success of your capital raise. Please reach out to us with assistance on your next Direct Public Offering. 

Decision Analysis

Our advisors assist company management in the DPO decision making process including assessment of overall costs, risks, timing and opportunity analysis. By collating and analyzing various data points, our team assists companies to achieve their business and capital raising objectives. Throughout this process we regularly discuss marketing options, requisite tasks and costs involved in your Direct Public Offering.

 

Offering Preparation

Prior to the public offering, most companies require some time of cleanup. This could include auditing of financial statements, SEC filing, due diligence preparation and review/change to the corporate structure. Our expert advisors and partners will work with management in planning and preparing the company for public offering and ownership. In doing so, a detailed schedule of various responsibilities and a budget of each necessary task will be outlined.

Pricing Analysis

Determining the percentage of the company to be sold and the amount of capital to be raised in the public offering will require a detailed pricing analysis of the existing company, its current structure and the value inherent in the existing shares of the business. Throughout this process, we use expert pricing and valuation methods in considering both the investor-base, the pricing and the entire Direct Public Offering. The pricing analysis and reports then become available to regulators who may require a response to pricing challenges.

Regulation Filing & Prospectus Preparation

Our advisors will work directly with auditors, corporate counsel and company management in determining a proper filing format for the company’s securities offering. In doing so, the consultants will appropriately draft and design a prospectus and other requisite regulatory filing documents. By handling the preparation and filing of the appropriate federal and state documents, our advisors ensure the public offering is implemented appropriately.

Prospectus Marketing

Appropriate marketing training of the solicitors peddling the company prospectus ensures any offering is performed in accordance with all state and federal securities laws. Your advisors will help to craft an appropriate database management system for your target investor audience. Your investment targeting team will assist in determining the relative importance of various investor groups in your company’s personal investment targeting list.