GO PUBLIC
Going public can be a defining moment for a business.
Short-term, going public can increase business valuations substantially, often by 300% to 500% or more. This is because publicly traded companies are valued based on future earnings, provide investors with a path to liquidate their investment, provide a high level of business disclosures which make investors more comfortable, and have unique ways to prevent a total loss of business value.
Long-term, public company valuations are substantially higher because the entrepreneur can use their stock, options and warrants to complete acquisitions, attract the best talent, close more deals and raise capital more easily, which amplifies their effort, accelerates their growth and enables smart entrepreneurs to create more value.
Raise Capital
When a company has a clear path and timeline to go public it is faster, easier and less dilutive to raise capital. After a company is publicly traded, it is even faster, easier and less dilutive to raise capital from a larger audience of public debt and equity investors who have interest in wider array of investment structures.
Make Acquisitions
As a public company, it becomes easier to source acquisition opportunities and structure more favorable transaction terms. Going public to acquire private companies that are already profitable is the fastest and most reliable way to build a large and valuable business.
Align Interests
As a public company, it's easier to attract, motivate and reward people through the use of stock options and warrants. In addition to the use of stock options for employees, the use of warrants can be extremely valuable when issued as part of a business development strategy.
FAQ
Who is your ideal partner?
Any company can go public, including startups. There are no minimum revenue, asset, or profit requirements to go public in the United States. We routinely work with early-stage companies with minimal revenue based on the strength of the entrepreneur & team.
However, our ideal partner is a smart and growth-minded entrepreneur who is past the desperation/survival mode and is ready to scale their business and valuation.
Do you handle everything?
We develop the go public strategy based on our partners’ unique facts and circumstances, bring in all third-party professionals (accounting, audit, legal, etc.), advise our partners through the process and manage everything on their behalf.
We also provide strategic advice on business growth, acquisitions, financing, corporate communications, and more.
It’s important to have a very experienced advisor to help you navigate the steps required for a private company to become publicly traded.
How much capital can be raised?
For direct listings and reverse mergers, entrepreneurs can raise millions of dollars, depending on the fundamentals of their business and their pro forma.
What does everything cost?
We charge an advisory fee payable in cash, but we are largely motivated by equity. As a result, we only engage with companies when we believe our process and strategies will help an entrepreneur build a larger and significantly more valuable business.
Third-party costs to go public largely depend on the accounting, audit and legal expenses which varies based on many factors.
Note that it generally costs $25,000 to start the process.
What are the requirements for a company to go public?
There is no minimal amount of revenue or profitability required to become publicly traded. Companies can go public in the United States with $0 in revenue. However, just because it’s possible doesn’t mean it makes sense.
When a company is not presently profitable, the entrepreneur needs to evaluate how they will finance operations until they become profitable.
What is a reverse merger?
A reverse merger is when a private company goes public by merging into a company that is already publicly traded and takes over the board, management and business.
During the process, the private company must provide the same level of business and financial transparency required in a direct listing or IPO.
A company can go public faster by reverse merger, but these transactions come with a unique set of disadvantages.
What stock exchange will my company trade on?
Companies that that we work with typically begin trading on the OTCMarkets and upgrade to a senior stock exchange whenever they qualify.
Who determines my valuation?
We have completed research, analysis, and evaluations on a wide range of companies.
With sufficient information about your business, we can provide a recommended valuation range for your company.
Ultimately, in the public markets, the public will determine your valuation based on its financial results.
Will investors kick me out of my own company?
Not likely.
When investors in small public companies are upset when management teams fail to deliver the promised performance, they typically just sell their stock rather than spend the time, money and headaches required to try and remove founders or management.
How did you start helping entrepreneurs go public?
Our founder, having spent his whole career active in the micro-cap market watching how companies that go public on the OTCMarkets struggle, decided there was a better way.
We now help entrepreneurs take their companies public and support their growth.
"Give a man a fish and you will feed him for a day, teach a man to ARBITRAGE and you will feed him forever."
Warren Buffett
Shefford Group, LLC.
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