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We
all dream of the ultimate IPO - going public and having a Facebook valuation.
While there are many advantages to taking a company public, including greater
access to capital, more liquidity for owners, and the ability to use equity as
leverage in acquisitions, there are many drawbacks as well.
While
the SEC and Congress are contemplating a reduction in reporting and audit
requirements for small public companies that can potentially greatly reduce
annual compliance costs, there will always be more regulatory compliance and
scrutiny of a public company versus a private one.
There
is also a great deal more visibility into your business. You will be filing
quarterly and annual statements that give a great deal of public transparency to
your business processes, your financial situation, your management team, your
risk factors and more.
Your
company's valuation will also be predicated on market perceptions. A public
company CEO has two jobs - one to run the company and the other to manage
shareholder expectations. It can be a heavy burden and many good business
managers are not prepared for this.
If
your company has a special story and strong fundamental value, there may be an
opportunity for you to take your company public. There are several routes to a
public status, including direct filing, an underwritten offering (the
traditional IPO) or a reverse merger with a public entity (caution required!)
We
will work with you to determine the suitability of an IPO option for your
company and if applicable provide a strategy to get you started on that
path.
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