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What
is your objective
for going public?
There are two main reasons
that I can think of and they are to raise growth capital or to monetize a portion of your investment. I believe
that both reasons make a lot of sense - that being said -
this does not mean that all companies are cut out to be a
public company. There is an old saying that you need the
steak and the sizzle to really make it.
What does having the steak and the sizzle mean?
The Steak: This is referring
to having the profits, infrastructure, scale and
critical mass to survive being a public company.
Essentially its costs money to be a public company and
certain companies in certain industries don't have the
critical mass to survive these costs.
The Sizzle: This is having the
excitement that if you and a friend where sitting down
having a conversation and he mentioned what the company
does and its performance - that company would excite him
and stick in his head log enough to get him to look it
up and consider investing and also pass the name on to his
friends and network.
Raising capital
simultaneously with the reverse merger?
Hypothetically, if I was to
take my company public and was expecting to get people to
invest in my Company, I would believe that at the same time
as going public I should be able to raise capital.
Many people are out there taking equity for free and
promising the dream of raising big capital in the future at
certain valuations. Personally, I find it very
hard to believe any valuation that people assign on a
company, property or asset unless they are willing to put
capital at risk at that valuation.
Where is the shell market
today?
The shell market is no different
than any other negotiated marketplace - it is always
fluctuating. That being said it is a negotiated marketplace
and the price for a fully reporting bulletin board shell
is not always "x" price - each
company should be looked at a
on a case by case basis as the
value of each company is
should be different.
The key to this
marketplace is finding the
correct information and
finding the correct financing
partner to lead you through
the process. Finding a
partner that has capital, is
willing to invest day one,
helps sources the shell for
you (if they own it, then I
believe its a conflict of
interest), and is willing to
be a long term partner to the
company is key. What
percentage of the company you
give to the shell is based on
you and your partners
negotiations. If your
company is further developed
and established then
clearly you should give less
of the equity away then if you
are a start-up that is
less valuable.
Value-added
partners in reverse mergers?
There are many
valued added partners in this
industry and also many that
promise to be but do not
perform. Check their
references, past successes and
process. If they have
been successful in the past
numerous times then its more
likely they will be successful
again versus someone who
hasn't. I would never
recommend giving up over 4% to
10% of your company for
nothing other than the promise
of helping you try to raise
capital in the future - but
that is just my opinion......
For other
opinions of the author feel
free to
contact us via
email.
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