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Idea Cafe's CyberSchmooz
Financial Feasts

Financing message forum where you can get and give insights found nowhere else. Belly up to the table and request funding. Or tell your money tales. Any money talk is fair game except ads.

The Latest Hot Topics:

Show Me the Money!
Belly up to the Financial Feasts table and talk turkey about money... what to look for, where & how? All money talk is fair game. Go

 

Public Offerings

1. What's a Public Offering?

2. Who is This Good For?

3. When is This the Best Choice for Me?

4. When is This Not Advised?

5. Tips for Getting The Money.

6. Ingredients You'll Need on Hand.

7. Watch Out For...

8. Web Links.

1. What is a Public Offering?

Selling shares of your company to the public, in the form of stock. This is a good way to raise a lot of money -- perhaps tens of millions -- but it opens you up to intense scrutiny, first from the Securities and Exchange Commission, state regulators, and then from the financing community, such as brokerage houses. Once you are a publicly-traded company, your financial situation and many of your internal operations become public knowledge. You will also be required to make regular reports to your shareholders and to the securities regulators. An initial public offering or IPO is the first time a company sells its shares to the public.

2. Who is This Good For?

Companies with a well-established track record that are looking for at least $5 million to invest in the next round of product development, marketing, and expansion.

Some high-tech startup companies, especially in the internet field, have managed to go public on the strength of their concepts and business plans, even before establishing a solid track record, however, this is unusual.

Small Corporate Offering Registrations allow smaller companies to raise less than $5 million with fewer regulations.

3. When is This the Best Choice for Me

When your company has reached a fairly high level of success and you need a major infusion of capital to get to the next level;

When you have good, strong financial performance.

4. When is This Not Advised?

If your company is new.

If your company's performance is likely to result in the public market being unresponsive to investing, or investing at such a low price that it actually makes the value of your company less than it would be if funded through other sources.

When you're unwilling to have the ongoing public scrutiny and regulation that a public company entails.

color business bar

5. Tips for Getting The Money

Try to get some publicity about your company while it's still private. You'll be prohibited by law from flogging your story immediately before a public offering

Have an auditor -- preferably from one of the top big accounting firms -- go through your financials to make sure that they're in perfect order before you invite in the investment bankers.

6. Ingredients You'll Need on Hand

  • A good securities attorney who is familiar with public offerings.
  • A top accounting firm and complete, audited, financials.
  • An investment banking firm.
  • A hefty budget, perhaps as much as $500,000 to $1 million. Those advisors are expensive.
  • A well-qualified Board of Directors and senior management in place.
  • An Offering Memorandum.
  • A good supply of antacid. Going public will give you heartburn, both during the process, and every quarter when you have to prepare your reports for the SEC.

7. Watch Out For...

Fees. Investment bankers typically get a fee equal to a percentage of the deal (often 3%) plus additional up-front fees. Plus, you'll also need a platoon of lawyers, accountants, printers, consultants.

The spotlight. You'll likely enjoy a burst of media publicity when your company's IPO hits the market. Can you stand the heat?

Distraction. Going public requires a lot of meetings, paperwork and filings, then cooperation with the investment bankers as they do their due diligence. Who's minding the store?

8. Web Links

Small Corporate Offering Registration Network
SEC regulations, links to detailed venture capital information and software packages you can download. Links to related services like attorneys, brokers, and a bulletin board for posting your situation in hopes of finding an investor or two.

IPOnet
Designed for investors looking to invest at least $410,000. Lists companies going public, with their prospectuses.

Venture Associates Ltd.
A Denver financial consulting firm run by James Arkebauer. Information on going public, as well as finding angels, venture capital, investment bankers, management consultants and more.

Securities and Exchange Commission
Rules, regs, offerings, filings of public companies.

Venture Capital Resource Library
Includes addresses of state regulators and district offices of the SEC, as well as information on securities law.

 

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