Many business owners have the goal of taking their company public, and raising capital, but are not large enough to justify the expense of an Initial Public Offering (IPO). These companies can grow quickly through acquisitions and mergers in order to reach the right size. Pacific Business Advisors can assist entrepreneurs find suitable acquisition targets and merger opportunities.

Notwithstanding, IPOs are still costly because an underwriter must be hired which can easily cost 5% to 7% per share.

Fortunately, it is possible to avoid hiring an underwriter and the IPO process by taking a company public by means of the direct listing process (OLP), also known as a direct placement, or a direct public offering (OPO). A direct listing also avoids lockup agreements and dilution of the existing shares.

Upon listing of a company's stock, whether by means of an IPO or OPO, the company will be subject to the reporting and governance requirements of all public companies. A CPA can advise you about these requirements.

Most OPOs do not require the issuer to register with the Securities and Exchange Commission (SEC), but they must comply with state disclosure laws. Companies that go public using a OPO will trade their securities in the over-the-counter market because they will rarely qualify for listing on an exchange.

Prominent companies that have recently gone public using the OLP are Ben & Jerry's Ice Cream and Spotify. You may be next.

While our firm can assist clients with mergers and acquisitions, owners intending to go public should see,k the advice of legal counsel.

 

Floating Stock

Floating stock is the number of shares available for trading a particular stock. Low float stocks are those with a low number of shares. Floating stock is calculated by subtracting closely-held shares and restricted corporate stock from a firm's total outstanding shares.

Closely-held shares are those owned by insiders, major shareholders, and employees. Restricted stock refers to insider shares that cannot be traded because of a temporary restriction, such as a lock-up period.

A stock with a small float will generally be more volatile than a stock with a large float. This is because, with fewer shares available, it may be more difficult to find a buyer or seller.

 

Nano Cap Stocks

Nano cap stocks refer to publicly traded stocks with a market capitalization of $50 million or less. They are the smallest stocks by market cap and are often referred to as penny stocks although a nano cap stock does not have to be a penny stock. They are smaller than small cap stocks.

 

Penny Stocks

Penny stocks refer to stocks of publicly traded stocks that trade for less than $5 per share. While some penny stocks trade on major stock exchanges such as the New York Stock Exchange (NYSE), most trade over the counter through the OTC Bulletin Board (OTCBB).

 

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