Every company that goes public believes it will grow and increase its share value. Often, companies run into trouble; they can run out of funding, have production problems, distribution problems, management/employee problems, lawsuits, etc. So what happens when a public company goes “out of business”? Good question. In many cases, these defunct companies maintain their public trading status and become “shell” companies. They generally have no business operations, little if any assets and trade for pennies. Some people think that these companies are worth a lot of money. Why? Because private companies that want to become public can purchase control of the shell in order to become public... 

The process to go public via initial public offering (IPO) or Direct Public Offering (DPO) follows a prescribed path. While some elements can be handled simultaneously, there are a number of parts that must be done sequentially. As a result, it will often take between six and nine months for a private company to go public. We have highlighted the major time elements to provide a basic understanding of the process. 1. The financial audit: Completing the financial audits is perhaps the most time consuming part of the IPO process. The actual timeframe will largely depend on the current state of your financial books and records. If your firm is organized, has internally generated income statements,... 

There are three ways to go public: - Initial Public Offering (IPO) - Direct Public Offering (DPO) - Reverse Merger 1. The initial public offering (ipo) An initial public offering is one where an investment banking firm is involved in raising funds for the company going public. Generally, they will also be of value in after-market support and often by providing research coverage. While those are clear advantages, the problem is that the vast majority of companies will not meet the income, asset, revenue or capital requirement standards that many investment banking firms have. As a result, these companies need to opt for one of the other methods to go public. 2. The direct public offering... 

The process to go public via initial public offering (IPO) or Direct Public Offering (DPO) involves a variety of steps. We have highlighted the major components to provide a basic understanding. Going public via IPO: The basic steps include: - engage professional advisors - organize corporate and financial books and records - identify most appropriate legal and accounting resources - complete financial audit - identify investment banking firm - complete registration statement - file with Securities and Exchange Commission - clear the SEC review and comment process - complete the public offering - file with the appropriate stock exchange Going public via DPO: The basic steps are virtually identical... 

If given the choice between going public through a reverse merger and staying private, there is no question we would opt to stay private. Companies who enter into reverse merger transactions often do so without a complete understanding of the real costs and issues. For example: 1. The cost of the public shell. Shells are priced with a cash cost and a share cost. Ask around and people will tell you that a “clean shell” (what exactly is a clean shell?) can be purchased for between $500,000 and $750,000. For that amount of money, you should be able to get 95% of the outstanding shares, which means that the shell also cost you 5% of your company. Let’s examine the 5% owned by the public.... 

Initial public offering can be an excellent way for a corporation to raise a large amount of capital.  In an initial public offering, a corporation’s shares are made available to the general public, thus providing a substantial influx of cash.  The term applies only the first of such offerings, and any later offerings are referred to as secondary market offerings. The benefits of an initial public offering are numerous.  In addition to the financial gains, a company that decides to go public will also increase their public awareness and credibility. Since public companies are more carefully and closely monitored than private companies, many investors feel that that they make for more stable... 

√ You do not need a brokerage firm or investment banking firm to take your company public. Many companies opt to go public through a direct public offering. In these registered public offerings, a private company follows the same rules and regulations that are followed by companies who go public with an investment banking firm. √ You do not need to go public through a reverse merger. Many companies falsely believe that they are too small or are not interesting enough to go public so they decide to go public through a reverse merger transaction. The truth is that virtually any company can go public through a direct public offering. √ You do not need... 

While going public is often touted as a cure-all, surefire way to gain funds for a company, it’s not without its drawbacks.  If a company is not in a good position to go public, the decision may actually hurt the corporation more than it helps.  Even as money flows in from the offering, the costs of setting up and maintaining a public corporation are high, and should be taken into consideration before such a drastic step is taken. Even before a corporation actually goes public, the costs are high.  It’s not uncommon for a company to spend a year beforehand just to get the company in shape and gather necessary documents.  Day-to-day activities become difficult as employees struggle to... 

The costs to go public via initial public offering (IPO) or Direct Public Offering (DPO) varies substantially with the type of company, size and complexity. We have highlighted the major cost elements to provide a basic understanding. 1. The accounting fees: The financial audits can cost from as little as $2,500 for a complete start-up to $35,000 for a fairly simple business that is generating a few million in sales, to hundreds of thousands of dollars for larger and more complex businesses. 2. The legal fees: The legal fees can cost from as little as $25,000 for a complete start-up to $45,000 for a fairly simple business that is generating a few million in sales, to $150,000+ for larger and... 

A company’s board of directors can play an important role in determining the kind of funding a public offering receives. If going public is your goal, the selection of board members should be given especially careful consideration. The board of directors serves a couple of important functions for a company that has gone public or plans to in the near future. First, the selection of particular board members can send a signal to investors regarding the quality of a company and the expertise behind the scenes. A board that is composed of highly-regarded experts in a field will be viewed much more favorably than a corporation with a board made up primarily of insiders. Knowledgeable outside experts...