Business owners often seek investment capital to help develop and grow their business. People rendering services expect to be paid for value created. However, paying someone to raise money has serious legal ramifications unless the recipient is properly licensed. Finding a licensed broker/dealer to facilitate a private or public offering for small to medium size companies can be extraordinarily difficult; if not impossible. This is because licensed broker/dealers generally represent companies which are fairly easy to finance. If a broker is unable to secure financing, they don’t earn a commission. As a result, start-up, early-stage and high risk businesses tend to be ignored. Fortunately, there is an exemption under federal law that allows officers and directors of a company to raise money on behalf of their business. There are a few caveats including that such persons may not collect compensation (e.g. a commission) for their capital formation efforts. As well, there are numerous laws relating to private placements and public offerings on a federal and state basis that must be complied with.

We specialize in helping companies go public through a direct public offering, which is an initial public offering without an investment banking firm being involved. Contact us with any questions.

Taking a company public can provide significant benefits for the entrepreneur, management team and shareholders of the private company. Going public provides companies with stock and options plans to provide employee incentives, acquire assets or other businesses, increase shareholder liquidity and maximizes company valuation. All else being equal, a public company has more ways to capitalize on business opportunities. The disadvantages of being public are largely limited to the accounting and legal costs as well as the time it takes to remain current in regulatory filings. Taking a company public can be a life changing event and create significant wealth.

Contact us at 516-509-8132 to learn more about taking a company public.

An IPO (initial public offering) can generally be completed in six to ten months. The time consuming part of the process involves the preparation of accounting and audited statements, drafting the registration statement, SEC review and raising the required capital.

The process has a fairly tight time range. It can’t be completed too quickly because of the various complex steps that need to be handled sequentially rather than concurrently. However, an experienced IPO team can ensure the timeline is kept to a minimum.

Contact us at 516-509-8132 for more information.

An IPO (initial public offering) follows a standard process.

Private companies must:

> prepare their accounting statements,
> obtain an audit from a qualified accounting firm,
> draft a registration statement,
> file the registration statement with the Securities and Exchange Commission,
> address all SEC comments,
> satisfy blue sky requirements for secondary trading,
> obtain DTC eligibility,
> submit an application with the relevant stock exchange,
> address all exchange comments and
> begin trading.

Sounds easy, but it’s a complex process with many details and issues that need to be properly addressed.

You can do it yourself or you can engage our services to help you. Contact us at 516-509-8132 for more information.

The completion of a Regulation D offering is complex and this article is not intended to provide a complete description nor any legal advice (disclosure: we are not lawyers and any legal advice should come from a securities attorney). We are a financial consulting firm specializing in assisting private companies go public by direct public offering. We have taken more companies public than most consulting firms and can prove our experience and success.

If you are already contemplating a private placement, it would be in your best interest to learn about and consider the benefits of a direct public offering. Benefits include: lower cost of capital, broader access to capital, faster time to raise capital and less dilution. There are no revenue, income, asset or other traditional requirements to go public, In fact, going public can help you achieve many milestones faster, easier and at less overall cost. Any legitimate company with the capital to cover the going public process can go public.

Call us at no cost or obligation for more information at 516-509-8132 or send us a message using the form to the right.

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Regulation D contains the rules describing how companies can raise investment without registering the securities being offered with the Securities and Exchange Commission. Most people refer to the Regulation D rules as the “private placement” rules.

There are three exemptions from securities registration within Regulation D:

> Rule 504.

This rule allows companies to raise up to $1 million as long as it is a legitimate business and is not already subject to SEC reporting requirements. General advertising is permitted as long as the offers are made only to accredited investors. However, many states have rules which effectively minimize or eliminate the opportunity to use Rule 504 to comply with their rules.

> Rule 505.

This rule allows companies to raise up to $5 million by offering stock for sale to accredited investors and up to 35 non-accredited investors. Sales must be made on a private basis and general solicitation is prohibited. Audited financial statements may be required depending on the offering.

> Rule 506.

This rule allows companies to raise an unlimited amount of capital by offering stock to accredited investors only. Non-accredited investors may not be offered and may not purchase shares in a Rule 506 offering. Contrary to common belief, a private placement memorandum is not required.

Additional details about Regulation D can be found here.

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We assist private companies with private placements (typically Regulation D, Rule 506 offerings to accredited investors) as part of the process to go public. If you would like to speak to us about direct public offerings, initial public offerings or reverse mergers; please contact us at 516-509-8132.