Reverse Merger, IPO Or Direct Public Offering (DPO), Which One Is Right For You?
A direct public offering is when a company raises capital by selling its shares directly to what is refer to as affinity groups, unlike an IPO which are sold by a broker dealer to its customers and the general public through other broker dealers who have customers interested in buying shares in the company.In IPO's you have a firm commitment underwriting, where the underwriters promise to purchase the securities for their own account if they can not sell them to customers.Best-effort underwriting: The underwriters do not guarantee any specific number of shares to be sold, they merely act as brokers.In an IPO the lead underwriter is refer to as the syndicate manager, he keeps the book and invites other broker dealers to join the syndicate. In an firm commitment underwriting, an eastern underwriters agreement makes members liable for any unsold securities, regardless of how much of their allotment they sold. The eastern underwriting agreements have joint and several liability.A western underwriting a agreement: In a firm commitment underwriting, it makes underwriters liable severally but not jointly. If one syndicate member can not sell its entire allotment, only he must buy the unsold securities.In a direct public offering the company sells the shares to affinity groups, who fall in this category? Customers, suppliers, distributors, friends, employees and other members the community.In a direct public offering the company place its shares in the hand of those people who are familiar with the company and know the company's product and management, and are most likely to hold the shares longer because they feel comfortable with the company's prospects for the future.Direct public offerings are considerably less expensive than IPO's and most effective for smaller offerings, for large offerings the sales staff and customer base of a broker dealer are usually necessary.Since the affinity group is already familiar with the company and its practices it doesn't put pressure on the company to change the way it does business, and will remain loyal to the company because of it's presence in the community.DPO's are preferable to venture capital financing because it allows the present management to execute its business plan without outside interference. When a small company turns to a single large investor they tend to surrender the freedom to make all the decisions.In a DPO like other method of going public today audited financial statements are required, unlike a reverse merger you choose your shareholders and you don't have to deal with shady, unscrupulous shell owners.Shell owners usually keep between 5-15% of the shares outstanding and are quick to liquidate, and besides they do not have an interest in the well being of the company's share price.
Even if you insert a stipulation in the contract that they can not sell for a year they will find a way of shorting the stock and destroying the share price.This make DPO a preferable option even for companies that don't need financing but would like to go public. If you are in the kind of business that keep records of your customer in order to bill them or for follow ups you already have a head start.You must be able to contact those affinity group in order to market the shares to them, a popular business that has a lot of client but does not have the contact information is at disadvantage because it's unable to contact its customer.There are other ways to market the company's stock for example a medical supply company might try contacting doctor in the area or by purchasing a mailing list.But the best way is when you have an established relationship with your affinity group and are in constant contact with them, by mail, newsletter, or email.Sometime a supplier or distributor may want to purchase an interest in the company in order retain the business and keep competitors from stealing the client.A DPO does not always require audited financials but if you plan on going public you will need them. So you must hire an auditing firm. A foreign company must use a Certified International Accounting Firm.A good Attorney that has experience with Direct Public Offerings, one that is familiar with the process and does not have to waste time researching and learning.You must prepare sales material that provides a good deal of information about the company, you want investors feel that your company has a future.You should always have a business plan, it will show investor that you have strategy for making the company succeed and doing it one step at a time.By setting dates for the implementation of each step in your plan it shows investors that you have things well under control, but allow some time in case you must make adjustments.If you wish to take your company public then you must file a form SB with the Securities and Exchange Commission and a form 15c211 must be filed with the NASD.A DPO is an alternative to an IPO or Reverse Merger for a company wishing to go public or obtain financing, it allows the company owner(s) to call the shots instead of an underwriter or a shell owner.We assist companies in going public through Reverse Merger, DPO and assist them in finding an underwriter if the company prefers and IPO.Which one is right for you? We can help you decide.We assist companies in going public through Reverse Merger, DPO and assist them in finding an underwriter if the company prefers and IPO.For additional information visit our website: http://www.genesiscorporateadvisors.comEmail: josephquinones@genesiscorporateadvisors.com.
Joseph Quinones is President and founder of Genesis Corporate Advisors, prior to that he was President and founder of JDQ financial Group, Inc. a full service broker dealer which Mr. Quinones proceeded to build up from a one man operation to the point where it employed many traders, and advised numerous clients while generating millions in revenues.joe@genesiscorporateadvisors.comUnderstanding Bridging Finance
Bridging finance, also referred to as "bridge loans" and "bridging loans", have nothing at all to do with re-constructing the London Bridge. Bridging finance is typically a short-term loan that a business uses to supply cash for a real estate transaction until permanent financing can be arranged. The word "bridge" conveys the fact that the loan is designed to get you over a temporary obstacle. A typical use for a bridge loan is to cover situations such as when a company needs to close on a new office building before having sold their old one. They would use the proceeds of the bridge loan to continue making payments on the old building until it is sold.
Bridging finance almost always requires that you pledge some sort of collateral as security against the loan. You could offer up commercial or private real estate that you own,or are in the process of buying, machinery and office equipment or even existing inventory. If you have outstanding business and personal credit, as well...
Understanding Bridging Finance
Financing > Understanding Bridging Finance
Holistic Junction's Featured School of the Week: Clinic @ Nature's Atrium
This week, Holistic Junction is featuring the Clinic @ Nature's Atrium. Established in 1999, the Cinic @ Nature's Atrium is situated just Northwest of Grand Rapids Museums, Arenas and Botanical Gardens in secluded Howard City, Michigan. Accredited by AMTA, ABMP, and the IMA; Clinic @ Nature's Atrium offers amenities such as lab room and study room. Additionally, financing the cost of your educational...
Holistic Junction's Featured School of the Week: Clinic @ Nature's Atrium
Financing > Holistic Junction's Featured School of the Week: Clinic @ Nature's Atrium
Understanding Bridging Finance
Bridging finance, also referred to as "bridge loans" and "bridging loans", have nothing at all to do with re-constructing the London Bridge. Bridging finance is typically a short-term loan that a business uses to supply cash for a real estate transaction until permanent financing can be arranged. The word "bridge" conveys the fact that the loan is designed to get you over a temporary obstacle. A typical use for a bridge loan is to cover situations such as when a company needs to close on a new office building before having sold their old one. They would use the proceeds of the bridge loan to continue making payments on the old building until it is sold.
Bridging finance almost always requires that you pledge some sort of collateral as security against the loan. You could offer up commercial or private real estate that you own,or are in the process of buying, machinery and office equipment or even existing inventory. If you have outstanding business and personal credit, as well...
Understanding Bridging Finance
Financing > Understanding Bridging Finance
Food Gift Baskets
Food will always be the most popular gift given and received. It is the most basic indulgence of man, and it makes the perfect gift for any occasion.
A basket full of delicious food is the most important prerequisite to any celebration. It can contain everything from the freshest fruits to the finest wines. Baskets of baked goodies, crunchy snacks and flavored coffees are a great way to pamper the taste buds of family and friends.
Food gift baskets are filled in a variety...
Financing > Food Gift Baskets
Reverse Merger, IPO Or Direct Public Offering (DPO), Which One Is Right For You?