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FINANCING
FINANCING - PRIVATE
Private funding comes in many forms and combinations. Early stage companies
begin with founders, then family, next comes Angel investors, finally Venture
Capital and/or debt. As your company achieves milestones and benchmarks the
value increases and risk for the investor decreases.
If you have a business running and started with funds the principles have invested, What do you do next?
You have to decide what structure you need to finance your business over the next few years
and what will happen for the company with this infusion of cash to grow?
The next rounds of capital will come from contacts you have, once you have developed a business plan
and presentation for outside investors.
Next stage, or part of this stage is to attract "Angel Investors", individuals with a high net worth who
support early stage companies with investment and/or advice. You will need a good plan and presentation
with a clear idea of how these will make a profit with their investment, and when. "Angel Forums exist
in most major cities and to present to one of these you must be sponsored in by a member.
Once through this stage, next will come either Broker sponsored investment or Venture Capital investment.
At this stage you would have good management, lead by a board of directors and a growing business.
Your clear plans are in hand for the growth their are looking for, which is substantial to meet their return expectations.
This will lead to the exit plan for investors. Buy back of their stock, the sale of the company or going public.
GOING PUBLIC
First we must answer the question, do we want to be a public or private company?
Have we asked ourselves the right questions for this vital decision?
Even under the most favorable market conditions, “going public”can be a
complicated, expensive, and even overwhelming process for many business owners.
Crucial decisions must be made in unfamiliar territory, and at a time of
financial and emotional uncertainty for everyone involved. We can help you
prepare yourself and your company for the problems, pressures, and dangers of
offering public stock. It is not necessarily the best path for many companies.
If you decide to go public, here are two main options:
1.) Traditional Underwriting: You take your existing company from private to
public, and do an Initial
Public Offering (IPO).
2.) Purchase an existing public “shell” and merge or complete a Reverse Take
Over (RTO). This is where you purchase a company that is trading on a stock
exchange without an operating company, and merge your company with it. It is vital that you have
the correct public structure to be a successful public company.
We have sources of:
Public shells
Underwriters
Corporate Finance
Venture Capital
Investor relations/after market support.
Pros Of Taking Your Company Public:
Public companies are valued higher than private companies.
Company founders give up less equity to raise capital.
You can acquire companies with cash and stock, which is less costly.
You can attract better management with stock options.
Liquidity for investors, minor shareholders and founders.
Added credibility with suppliers, customers, employees and the financial
community.
You can control your company from a minority position.
Public companies have the opportunity to grow faster than private ones.
Cons Of Taking Your Company Public:
You need to manage 2 businesses – The operating company side and the public
side.
You need to report each quarter to the Exchange and to the Shareholders.
The public has access to information about your company.
Cost of operations is higher for public companies.
The requirements of being public takes focus away from building your business.
If the stock prices fluctuate, management is held responsible by shareholders.
Structure
This is a very critical area of going public. It will to a large degree
determine participation of underwriters and your stock price. You must consider
future rounds of financing and structure will help or hinder your future.
Guidance
Our role is to guide and advise companies throughout this process. There are
many considerations, opportunities and dangers that need to be addressed. We
are there to protect the company’s interests while assisting to get your deal
completed and your company up and trading.
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