There is no set amount of revenues or grasp profit that is required to booty your company public, then when is the absolute ace age to action public?
The short answer would be when you dont charge to, or your company is not desperately looking for financing in adjustment to survive.
Instead you are looking for chief in adjustment to finance advance and expansion, or you would according to to statement the public shares as currency to accomplish acquisitions.
But action isnt always absolute, so we will booty a attending at a few questions asked by CEOs that accept called me looking to action public.
What should revenues and grasp profit be before going public? A company could conceivably accept 5 consecutive year of profitability and be a bad candidate for going public.
I recently had a CEO called me from such a company, the revenues and grasp profit were selfsame for the previous five age but robust compare to abounding of the companies you beam going public in the NASDAQ BB and Pink Sheets today.
But I didnt beam any advance in either revenues or grasp profit nor any indication that there was going to be some in the approaching, the CEO did not apperceive where approaching advance would come from.
I told him that if he was aloof going public so that he could acquaint friends that he was the CEO of public company then he shouldnt action public.
But if he could advance a strategy for advance and put at buttoned up a bag aim outlining how he was going to abound revenues and grasp income, he could alter to an a-1 candidate for going public.
The adverse of that would be a company that has been losing almighty dollar for 5 age but is exhibiting advance in revenues every year and the losses are smaller.
This company has a bag aim and targets for bag expansion and every year is affair those targets, and going public is allotment of the bag strategy. So you acquaint me which company has the greater abeyant of being a acknowledged public company?
Investors are always looking for advance candidates to put their almighty dollar in to. So they will action with the company that has the abeyant to accomplish them the most almighty dollar in the approaching.
Another bearings that I generally come across is CEOs who appetite to action public and dont accept any almighty dollar for the audit or the legal fees.
There are certain expenses associated with going public that charge to be paid. These CEOs generally appetite to accomplish a reverse merger as its the fastest road to action public, but Public Shells are expensive and could be the costliest avenue statement to action public.
When a private company purchases a Public Shell, the purchaser must perform a indepth due diligence of the Public Shell to accomplish sure that it is clean and not bringing any former legal botheration to the private company.
The due diligence action generally amuse neglected as the private company is not accepted with the ins and outs of the public arena.
So they generally booty the advised accustomed by the shell owner and submit to his demands. When companies rush to action public they generally alive to affliction it, short cuts can be actual expensive. I always accord CEOs who call me the alternative to reverse merger, such as Direct public offering, Regulation D or IPO but if their minds are already fabricated up or they may accept already purchased the Shell without doing proper due diligence.
I will accomplish all I can to ace shot and accomplish it assignment but the CEO must be warn of the perils ahead and how to prepare for them. For archetype if he does accept a lot of shareholders and a lot of shares a-1 he must reverse split the shares to lessen the figure of shares available for sale including those own by the Shell owner.
The Shell owner will generally crave the private company to sign an agreement not to reverse the share prior to the sale, if they accede to this demand they will be manufacture a ample aberration.
Again if the company hires an investors relation firm to accomplish PR assignment and pays them in stock they will beam a impermanent absorption in the companys shares while the IR is dumping their share.
An IR firm must be carefully and thoroughly check out by asking for names of previous and ad hoc client, aloof pull up chart of their clients stock and beam if you detect a sudden rise in the share price and a abrupt drop once they began dumping their shares.
There isnt such a affair as a absolute age to action public and if you alpha preparing early you will be ahead of the curve, alpha by having your financials audited. This is something that will accept to be done and so if you accomplish as you action along you wont accept the ample expense all at once.
Accept a bag aim prepared and that is a mirror of your eyes and strategy, you will not stick to a bag aim that does not be resonant your epitome and your eyes of what is going to assignment.
Accomplish sure the bag aim is sound and again flexible, it must allowed for a chicken feed in direction when one is warranted. A bag aim is according to a road map, it has a starting point an a destination, you mapped out the road you appetite to action but sometimes you must booty and altered route to amuse there.
Accomplish sure you accept capable competent bodies in the adapted positions a baby company is not the abode for specialist, you must accept bodies who can multi assignment or you will be arm to hire added employees than all-big.
Bethink nobody apperceive your bag according to you accomplish but there are certain bag principles that that must be adhere to, as able-bodied as ethical conduct that must be applied.
If you aloof chase the golden rule Accomplish unto others and you would accept them to unto you you will accept done your allotment. As you always reap what you sow.
You must be astute in selecting the bodies you deal with. There are a lot of unscrupulous appearance in the shell and consulting bag who will sell you on going public even if you are not ready.
They will again sell you a Corporate Shell and anything else they can, and before you apperceive you will be calling a legitimate consultant to advice you but it may be too unpunctual.
I recently had a phone call from a CEO who had a ok baby company but he charge chief to finance the advance in the bag, the company was growing every quarter but was trading for pennies as it had over 150,000,000 shares a-1.
I suggested that he needed to accomplish a reverse split before I could action to my financing bodies, as nobody will put almighty dollar into a company that is so diluted. He replied that he couldnt reverse the shares accomplish to an agreement with the shell owner.
When you buy a shell accomplish sure you are buying the entire flow and that the shares in the hands of the public is not substantial.
Otherwise choose an alternative road of going public. Reverse Merger is not the alone road to action public.
Reverse Merger may be the least desirable choice for some bodies, So before captivating any action attending into the other options available. If the consultant you hire alone apperceive Reverse Merger maybe its age to attending for somebody else. There isnt a absolute age to booty your company public, it must be allotment of your over all bag strategy and eyes, and it requires a admiration to accomplish assignment.
If you are ready to booty your company to the abutting akin or accept any catechism accomplish not hesitate to email me [email protected] or appointment our website: www.genesiscorporateadvisors.com
About the author:
Joseph Quinones is President and founder of Genesis Corporate Advisors, prior to that he was President and founder of JDQ financial Accumulation, Inc. a full service broker dealer which Mr. Quinones proceeded to body up from a one man operation to the point where it employed abounding traders, and advised abundant clients while generating millions in revenues.
Originall posted September 30, 2012