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Merger, Acquisition & Transaction Consultants |
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King & Associates, P.C. |
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SUMMARY OF REASONS TO GO PUBLIC |
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Phone: 817-598-1007 Fax: 208-693-3007 E-mail: Doug@ReverseMergersHome.com |
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To contact us: |
REVERSE MERGERS WITH PUBLIC COMPANIESADVANTAGES
Saves Time - Less time than doing an initial pubic offering (IPO) - 1 to 6 months versus 6 to 18 months at minimum.
Saves Money - Total costs of a reverse merger is usually $100,000 to $300,000 - usually under the costs of a traditional IPO, plus no underwriter commissions or fees.
Costs typically associated with an IPO are: 1) Legal fees for corporate and underwriters counsel including blue sky state registrations costs between $100,000 and $200,000; 2) Audit work must be prepared by an SEC CPA, with at least two historical years, performed to the SEC SX requirements costs $75,000 to $125,000; 3) Transfer Agent and Filing Fees cost between $20,000 to $40,000; 4) Printing and Road Show cost $50,000 to $100,000; 5) Underwriting sales commissions are typically 10% of YOUR gross proceeds; 6) Underwriting expenses are typically 4% of the offering proceeds, plus free stock options and warrants; 7) YOUR company will have to pay the additional 700 to 1,000 hours of time the CEO and/or CFO will have to work on the project.
Saves Legal Hassles - The legal work is considerably less than an IPO.
Private Fund Raising - Can be completed prior to, or in connection with, the registration. Click here to see a list of all the recent Private Fundings of public corporations.
Public Fund Raising - Can be initiated after the initial registration is complete. This may result in your receiving more money at higher valuations.
Acquisitions - Can be made for public stock after your public company starts trading.
Convert - debt to equity using stock.
You Do Not Have To Be Sexy - Most IPOs need to be in an industry with public investor sex appeal. Any type of company can complete a merger to become publicly held.
Liquidity - Investors can buy and sell your stock, original investors have an "exit" for their investment.
Incentives - Management incentives via stock bonuses/options and to attract and motivate employees are more powerful using public company stock.
Control - You and your current private company shareholders will generally own a large majority of the public company.
Prestige - Publicly traded companies are held in higher regard. This visibility reinforces marketplace and financial standings which automatically creates additional value for the company. Also, public companies receive more attention from major newspapers, magazines and periodicals.
Growth - Grow through acquisitions using stock instead of/or in combination with cash.
Estate Planning - Assists in establishing stock values and the value is easily monitored.
Exit Strategy- Provides inside investors with a known exit.
Higher Valuation of Stock - The price per share of a private company goes up usually about five times its former price even if the earnings of the company remain unchanged after going public. On average, private companies usually sale for 4-6 times their earnings if you can find a buyer while public companies sale on average of 25-30 times earnings.
Foreign Companies - Reverse mergers are a simple way to obtain control of a United States publicly traded company without subjecting your foreign operations to U.S tax.
Have all your shares registered and free-trading in the merger transaction.
Know exactly who owns the "Public Float."
Keep up to 90 to 95% of the public company for your shareholders.
Public shares (S-8) can easily be used to pay professional fees, officers and directors.
Public stock can be used for employee benefits.
Warrants issued as part of stock dividends can be used to raise cash for the company when the trading price of the stock exceeds the strike price of the warrants.
Have a trading symbol per your designation.
Be registered with EDGAR at the SEC World Wide Web site www.sec.gov.
DISADVANTAGES
Confidentiality - Complete financial disclosure is required to become publicly held.
Public Reporting - Reporting expense is greater because of the need for full disclosure.
Dilution - Owners give up some equity percent.
Time Involvement - Management must devote additional time to public company operations
Liability - More company visibility brings a higher level of liability exposure.
Expense - Higher costs of regulatory compliance for audit, legal and investor relations.
What You Need
Comprehensive Business Plan - to present to potential investors and market makers.
Strong Management Team - public investors demand strong management teams.
Convincing Marketing Plan - indicating good sales growth.
Product or Service - which shows a good growth potential.
Financial audits - SEC qualified audited financial statements for your prior fiscal year.
Legal counsel - qualified to deal with regulatory compliance. |
Want To Go Public NOW?
HIGH-PROFILE REVERSE MERGERS
Tony Robbins To Tony Robbins, success is a matter of "Awakening the Giant Within." In this case, that giant is worth a ton of cash. The broad-jawed spokesman for self-esteem pulls in more than $80 million from sales of books, tapes and seminars annually. And now, he's self-helping his way into the dot.com craze. Trading on little more than name and charisma, the 39-year-old has become chairman and majority owner of a publicly traded Net company whose value now exceeds $480 million. "We are developing the eBay of personal and professional empowerment," says Robbins. The new company, GHS Inc., has no revenues from Net operations. As of September 1999, it did not have a Website. In fact, the company had existed only as an obscure provider of medical services. Now, through a reverse merger, the company is giving Robbins access to publicly traded stock without the time-consuming, expensive, and disclosure -intensive process of an initial public offering. Since May 1999, when Wall Street got word that Robbins was coming aboard and GHS would be recreated as a dot.com, the company's stock soared from $.75 to $12. This gave the broker who organized the deal a $48 million dollar paper gain on their original investment. Robbins, who put in no cash, has a stake worth $276 million. The increased value of GHS stock will enable the group to purchase additional assets. They recently acquired the rights to San Francisco-based "The Learning Access" which has more than 700 not-for-credit courses. Excerpt from Business Week Magazine Sept. 13, 1999 Pg. 48 By Kathleen Morris Ted Turner After inheriting his father's small billboard company, Ted Turner found himself facing the hard facts of business. His dad's operation was in rough financial shape. Turner had a bold vision for the future. He became fixed on building a media empire based on new satellite technology and the expansion of television markets with the opening of the UHF broadcasting bands. In 1970, with a little investment cash, Turner acquired the once publicly traded Rice Broadcasting (WJRJ-TV) in Atlanta. Reverse Merging his billboard company into Rice Broadcasting adding value to the company's stock. Turner was now in a position to tap the capital markets of Wall Street. He created TBS, the first national UHF superstation, CNN, and The Cartoon Network. Latter he purchased the MGM/UA film library and launched Turner Film Classics. Never one to sit still, Turner acquired a national baseball franchise which he moved to Atlanta. After an unsuccessful attempt to purchase the long established CBS-TV network Turner Broadcasting was itself acquired by the Time/Warner corporation. Today, his is personal worth over five billion dollars. Muriel Siebert In the early '60's a college drop-out left Cleveland, Ohio and moved to New York City determined to find a career. She was interested in business and the stock market in particular. The problem was, women had very limited roles they could play in Wall Street finance. Muriel Seibert knew the importance and value of information in the Wall Street game of high finance. She became a top industry annalist, specializing in the aviation and entertainment markets. When she began getting calls f |