Public Offerings
Going public can be one of the most challenging and rewarding experiences a company can face. We have advised numerous companies on the process of going public, and we work closely with them to help them understand the process and to make sure the process runs smoothly and efficiently for them. There is more than one method for going public, and the following are methods we have used to take our clients public:
Registered Public Offering
The initial public offering (IPO) is conducted by the filing of a registration statement with the United States Securities and Exchange Commission. We have taken many clients public through this process.
- We work with the client to prepare the registration statement.
- We then file the registration statement with the SEC.
- We work with the staff of the SEC to assure that they declare the registration statement effective in a timely manner.
- We then work with the client and any underwriters to assure a smooth sales process.
Reverse Merger
Private companies can also go public through a reverse merger. In this type of transaction the private company merges with a public company, and following the merger the owners of the private company now own the public company. We have represented many companies that have gone public through this method, and we have represented public companies that have been used as a vehicle for private companies to go public in a reverse merger. There are advantages and disadvantages to this approach.
Advantages
- It is quicker.
- It is often less expensive.
- Takes less management time.
- No underwriter is required.
Disadvantages
- Regulatory hurdles.
- Carry the prior history of the pre-merger public company.
- Responsibility for any existing debts of the public company or debts that may emerge in the future.
- Public company or shell must be clean and have no debt or prior adverse history.
Form 10
Companies may go public without the sale of securities through the filing of a Form 10 under the Securities Exchange Act of 1934. This process is much less rigorous than the filing of a registration statement or a reverse merger. Once the Form 10 is filed with the SEC there is no review process. The Company automatically becomes a reporting company 60 days from the filing of the Form 10. We have represented numerous companies that have gone public using this approach.
Advantages
- Much faster.
- Much simpler process.
- No SEC review.
Disadvantages
- No money raised through the sale of securities.
- No promotional splash.
Spinoff
Another option for becoming a public company is through a spinoff. Under this approach a subsidiary of a public company (which may exist or may be created) is spun-off to the shareholders of the public company. Following the spinoff the shareholders of the public company become the shareholders of the company that is spun-off. Thus the new public company will automatically have a shareholder base, and will generally qualify for listing on a stock exchange or on the over the counter bulletin board.
Our Experience
- We have represented clients who have gone public using all the methods described above.
- We make all required filings with the SEC, FINRA, NASD, OTCBB and with all applicable states.
- We guide our clients through the process in a way that minimizes any disruption to their business, and we work to smooth out the rough edges in what can be a difficult process.
- Our fees for these transactions are often much less than larger law firms that do similar work.
Advantages to Going Public:
- Provide additional funds for business.
- Retire debt.
- Expand.
- Acquisitions.
- Create liquidity - stock in a public company is quoted and has an ascertainable value.
- Provide a vehicle for non-cash transactions.
- Employee Compensation
- Creates employee pride (success of company can be seen in daily quotes).
- Creates market image and prestige for company (success image).
- Improve customer relations (because they can own shares).
Disadvantages to Going Public:
- Required to disclose information that may be considered sensitive.
- Give up some control.
- Must file periodic reports with the SEC.
- More formal management structure, because more open to scrutiny.
- Pressure on management to perform because results of operations are known.
