Author Nick: JamesScott
Name: James Scott
Site:
For diversified investors, the IPO is the holy grail of all investments. Why? Because of the higher yields involved with a company with a great concept that is about to step onto the scene and change the order of an industry. Many times the investors are able to take advantage of a deeply discounted stock price compared to the retail price available to the mainstream.
If you have a public or pre public micro cap company you’ve obviously investigated or experienced the staggering swings in daily trading volume. There are numerous causes for these swings such as: federal legislative announcements that affect your industry, not living up to the previous quarters financial projections and even something as simple as not keeping the public informed of what’s going on with your company which can cause one of your big stock holders to sell their shares causing a ripple effect throughout your shareholder base.
There is a system in place for globalization. In order to expand you need to become part of the system. There is no organized group of puppeteers controlling your economic fate and for any obstacle in your path there is a solution. Economics and international expansionism is a combination of formula and contacts.
It’s a sad fact, the roadside to achieving a trading symbol and succeeding in volume trade with the OTCBB, NASDAQ and NYSE is littered with the carcasses of companies just like yours. I don’t say that to discourage you but to help you approach with caution.
Companies decide to go public for many different reasons: expansion, need for capital, exit strategy, acquisition facilitation, globalization etc. But what are the real advantages to going public? First, let’s go over the disadvantages. Your life becomes an open book and as an executive your spending habits and failures will be a matter of public information with your annual and quarterly filings.
Before you decide to go public allow me to paint a picture for you. You’re on a crowded beach, the water is warm, the waves are calm and you decide to break away from the crowd and confidently swim a little further than everyone else. All is calm; the sun gently warms your back as one stroke after the next takes you further from the beach and closer to the distant horizon. A few minutes later the sun is covered by clouds and like a bomb ‘BAM’ a crack of thunder, lightning lights up the sky and buckets of rain begin to pour from gray clouds. You look back and the entire beach is deserted.
As a strategies consultant my firm deals with IPOs on every scale whether we are the lead group on the project or not. Sometimes we run the project and put our own team in place, others we are part of a team for another consulting firm. One thing that I’ve learned is when is our project we need to take the ‘lead role’ because at the end of the day everyone just sits staring unless they are given exact descriptions of what needs to be accomplished and in what time frame.
It’s outside the nature of the strong willed, motivated IPO consultant, global strategist or structuring consultant to give up and through in the towel but sometimes failure is the only option. When you deal with a company, which will represent most of your clientele, that will follow instructions to get from point A to point B you can help them succeed promptly with little resistance and you can optimize their position with relevant ease if you are truly qualified for the contract that you’ve taken on.
When a corporation grows stagnant and lacks growth and the financial reserves are drying up the company’s C level executives need to give the three thousand foot analysis and look at all angles of the corporate entity as objectively as possible to find leaks and chinks.
When companies contact us about going public they will typically start out by saying something like, “I’ve been watching your videos and have been following your company in the media for a while now” or “I’ve been reading your articles about globalization and going public over the past few months and…”. My point in stating the above is this, I’ve never had a company that calls and says, “We were going to get a corporate line of credit but figured we’d go public instead”. Companies that are going about this the right way will have spent time preparing their company to go public and they’ve taken the appropriate initiatives to set up post public finance options, investor relations and other efforts that are conducive to their company performing in the aftermarket.