What is a Direct Public Offering?

A Direct Public Offering (“DPO”) is an offering which is completed by a private company and its advisers as an alternative method to become publicly traded. It does not involve an investment banking firm nor a shell. In a DPO transaction, the private company goes public utilizing the same federal, state and exchange rules and regulations utilized to complete an Initial Public Offering.

What are the advantages of a Direct Public Offering?

There are many advantages of a DPO, including but not limited to:

• The entire process to become public is controlled by the private company and its advisers;
• There is no need to attract the attention or interest of an investment banking firm;
• There is no need to identify, evaluate, purchase or use a shell company;
• Because there is no need for a shell company, there are no contingent liabilities or unknown risks that are inherited;
• The process is not subject to market or general economic conditions;
• A DPO costs less than a traditional IPO and less than a typical reverse merger;
• Any legitimate operating business can become publicly traded through a DPO, regardless of their financial size or condition.

What are the disadvantages of a Direct Public Offering?

There are several disadvantages of a DPO, including but not limited to:

• Less investment capital is raised than an IPO because there is no investment banker participation;
• Often, the cost of a DPO exceeds the amount of investment capital raised in the process;
• It takes between four and twelve months to complete the DPO process.

What are the costs of a Direct Public Offering?

A DPO has five major cost components:

• Accounting fees
• Legal fees
• Professional adviser fees
• Filing fees
• Financing fees

Accounting fees, legal fees, professional adviser and filing fees are largely dependent on the size and complexity of each transaction. We have assisted private companies through the entire process for under $50,000 and have seen others cost more than $1 million.

Financing fees are charged based on the amount of funding raised and fees can only be paid to licensed persons. We are transaction consultants and not licensed to raise funds by any federal, state or regulatory agency.

How can we help you with a Direct Public Offering?

As professional financing consultants experienced in direct public offerings, we assist private companies through the planning, implementation and management of the transaction. We enable management to focus on building their business by reducing the amount of time they need to be directly involved in the process. And, by properly planning, implementing and managing the transaction, we are able to efficiently use resource and reduce accounting and legal fees.

For more information about our Direct Public Offering Services, please contact us now.