Should a company decide to go public, the process can take anywhere between four to Read more →
About Going Public
Ways to go Public
1. INITIAL PUBLIC OFFERING (IPO)
2. REVERSE MERGER WITH TRADING SHELL
3. MERGER WITH A REGISTERED CUSTOM SHELL
4. FULL REGISTRATION
An Initial Public Offering (IPO) can take one year to several years and cost as high as one million dollars or more.
An IPO’s fees are related to the difficulty of the due diligence of the company, audit, the inherent fees of an underwriter and attorney.
REVERSE MERGER WITH TRADING SHELL
In a reverse merger, a private company merges with a publicly listed company, which has no assets or liabilities and is in good standing with its required filings to the SEC. The publicly traded corporation is called a “Blank Check” since all that exists of the original company are its corporate shell structure and shareholder base. By merging into such an entity, a private company becomes public and/or a subsidiary of the public company.
The requirements of private companies are as follows: Up to 2 years audit filed within 4 days of merger; re-filing of the SEC form 10-SB (60-day process); quick form 15c with the FINRA assuming 90 days have not lapsed of being removed from the exchange it was trading on. (A long form is needed if 90 days have lapsed).
Fees for this merger are in the range of $400,000. Ownership for the private company is as low as 60% after the merger. The estimated time-line for closing a merger including all filings and due diligence is 2 to 4 months. Price is determined by the perceived value of the private company and ownership retained.
MERGER WITH A REGISTERED CUSTOM SHELL
FD Financial, Inc. has a list of custom shells that, with the right merger, can be registered and trading in a short time for a minimal fee. The custom shell is structured to meet all requirements necessary to become a public trading company. Some of these requirements include; shareholders who meet the provisions of rule 144 of the SEC, 300 shareholder base with round lots of 100 shares and corporate structure with bylaw requirements.
The Registered Shell is custom fixed to the individual needs of the private company by changing the name of the Shell and stock authorization before the private company acquires the Shell. This helps us avoid major restructuring costs, proxy statements and delayed start-up time. The Registered Shell has a fixed minimum 300 plus shareholder base with 100 shares or more each (a NASDAQ SmallCap requirement). Also the Registered Shell comes with a 2-year minimum audited financial statement, a letter of opinion from counsel stating the tradability of the free trading shares, a transfer agent and a CUSIP number. Fees for a Registered Custom Shell are in the range of $225,000 and the estimated time-line for closing the merger including all filings and due diligence is 4 to 6 months. The private company can receive from 90-99% controlling interest in the form of restricted shares through a reverse merger. There is no compensation due for a qualified and approved reverse merger with these Registered Shells.
With a Registered Custom Shell The Company Can:
- Appoint its Director(s) and thereafter its management;
- Change the corporate headquarters and, if need be, change the state of incorporation (Domicile);
- Increase its authorized shares for future offerings;
- Use restricted stock to cancel debt;
- Use stock incentive plans to attract and keep key employees;
- Use its stock for acquisitions;
- Allow the stock to trade in its industry multiples creating a market cap greater than its book value;
- Raise capital based on your trading value while offering less ownership of the company.
In a full registration a company registers with the SEC. The Founders remains in control of their Company and the cost is considerably less in capital cost and ownership dilution. For a more details, see “ALL INCLUSIVE – IT’S YOUR DECISION”.
|TYPE||COST||TIME TO TRADING||COMPANY OWNERSHIP|
|IPO||One Million Plus||One to Several Years||Based on Offering|
|Trading Shell Manager||$400,000 Plus||2 – 4 Months||as Low as 60%|
|Custom Sell Merger||$225,000||4 – 6 Months||as Low as 90%|
|Full Registration||$135,000 – $195,000||4 – 6 Months||100%|