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Ways to Go Public

OPTIONS FOR “GOING PUBLIC”

There are numerous ways of going public. We outline only a few below.

1. Initial Public Offering

Initial public offerings are the best known but not the most common way of becoming publicly traded. In recent years, there have been lengthy period s of time in which there were no IPO’s. These are “underwritten” by large brokerage firms, often with guarantees of capitalization to the company going public. Today, there are only a fraction of the full service brokerage firms left and only the very large ones seem capable of doing an IPO.

2. Reverse Mergers

This is the most common means of becoming publicly traded. The best known version of a Reverse Merger is when a private company merges with a trading company that failed as a business. The company still trades but may not have much happening in terms of business, so it is sold to new company, often with a large “reverse” in issued shares. This way of going public is fairly inexpensive (usually $200k to $300k) but has a lot of risks – not recommended.

3. Merger with a “Virgin Shell”

This is an increasingly popular way of becoming publicly traded. The vessel into which an operating business is merged, usually has a very small amount of shares issued, so it is much easier to maintain “control” in terms of share ownership. The current price of a fully reporting, trading, virgin “shell” is about $400,000. With 90 plus percent of the stock deliverable. A virgin shell (“spac” or “419”) with SEC approval can be purchased for $65000 to $100,000. These are companies specifically designed for a merging operational company. Once the company is audited and merged in, final trading approval can occur rapidly. Trading approval comes from FINRA, which is connected with the National Association of Securities Dealers (NASDAQ).

4. “The Long Way”

A private company can issue an “offering” followed by a “stock registration” and then it can file to trade. This process probably averages a year, but is relatively inexpensive: usually in the $50k to $100k range.

Learn how to combine PIPEs with a strategic reverse merger to maximize your public offering.