twitterfacebookgooglerss

Taking a Business Public: Key Considerations and Risks

Taking a Business Public: Key Considerations and Risks

The reasons to take a private business public are as diverse and varied as are the methods for getting there. Some wish to go public to appease investors looking to for an investment ROI. Others want to go public so as to use stock for mergers and acquisitions. Some execute an expensive IPO with a large investment bank, while others go public with the low-cost alternative of a reverse merger or self-filing. Regardless of the method or motivation for being public, the risks associated with public status are real. Before you take the plunge with an IPO, reverse merger or self-filing, be sure you fully consider and weigh all associated costs and risks. What follows is a brief description of a few (not all) of some of the potential pitfalls of taking your private company public.

Legal & Liability Risks

Public companies are always subject to more risk than private firms. Public firms are much more likely to be a defendant in a lawsuit and public companies are often targeted with even spurious suits that can cost thousands in attorney fees, not to mention the time and headache of going through the process.

Being a party in a lawsuit, especially if you’re a micro-cap company with a finite amount of time and capital resources, is the last thing a company with lean management wants to deal with. Management has a business to run. They don’t want to chase lawyers making spurious and libelous claims about your business. Public companies that have not been sued typically haven’t been around long enough.

Accounting & Reporting

The cost of becoming and maintaining public status has substantially increased over the last decade, thanks to fraud cases like Enron, WorldCom and a slew of corrupt Chinese reverse mergers. Sarbanes-Oxley compliance rules were the direct result of such cases. Gladly, the rules are a bit less stringent for those on some of the lower exchanges like those stocks traded Over the Counter (OTCQX & OTCQB). Even with such loosening, annual audit and SEC reporting requirements can be onerous without the right PCAOB audit firm in your back pocket. That is, one that can do quality work and won’t charge $100K a year. They’re out there, but you have to know where to look.

Exposure to Manipulation & Macro Shocks

Because other investors, pump-and-dump schemes and market manipulators have access to buy and sell your company’s stock in the open market, there is risk inherent in having securities in the public float. In a worst case scenario a company may be the recipient of a wholly illegal and drastically business-altering scheme wherein a promoter begins selling large quantities of the companies stock to help drive up the price, only to sell, sell, sell immediately thereafter, leaving the remaining shareholders with the bag. Luckily such schemes are strictly punished with fines and jail time, but they exist and are especially prevalent in the realm of penny stocks.

In addition to the occasional shifty investor relations firm, macro shocks in the financial markets can also have an impact on the business, more so when a company is public than when it is private. This is true, especially when you look at the wide fluctuations in a company’s stock during times of shock.

Access to Capital

Raising capital is easier when you’re public, but not as easy as most people think, especially for smaller firms. Sure Private Investments in Public Equity (PIPEs) can help, but you have to find and have access to the investors that may believe in your idea, business model and plan for growth in a way that makes them want to open their wallets. Businesses that think going public automatically graduates them into a world where capital access is unlimited are living a PIPE dream (pun intended).

Yes, “going public” sounds sexy on the surface, but with more power comes much more responsibility. If you think your business is ready for the big leagues, then suit up. Otherwise, it’s usually wise to take a back seat until you’ve built a great private company that’s primed and ready for a public showcase.

Published by Sandy

65 Comments

  1. now g · June 20, 2020

    Hello! Do you use Twitter? I’d like to follow you if
    that would be ok. I’m definitely enjoying your blog and look forward to new posts.

  2. give g · June 20, 2020

    Hi there i am kavin, its my first occasion to commenting anyplace,
    when i read this piece of writing i thought i could also create comment due to
    this sensible paragraph.

  3. g but · June 20, 2020

    There is certainly a great deal to learn about this issue.
    I like all the points you have made.

  4. g new · June 21, 2020

    I feel this is one of the most significant information for me.

    And i’m happy studying your article. However want to remark on few general things, The
    site taste is wonderful, the articles is really excellent :
    D. Excellent task, cheers

  5. time g · June 21, 2020

    Attractive section of content. I just stumbled upon your blog and in accession capital to assert that I acquire in fact enjoyed account your
    blog posts. Any way I’ll be subscribing to your feeds and even I achievement you access consistently rapidly.

  6. g rsacwgxy · June 22, 2020

    My brother recommended I might like this blog. He was entirely right.
    This post actually made my day. You can not imagine simply how much time I had spent
    for this info! Thanks!

  7. http://t.co/4kPhN7Ek0L · June 24, 2020

    Cbd oil that works 2020
    Good way of telling, and pleasant piece of writing to obtain facts on the topic of my presentation subject, which i am going
    to deliver in school. best rated cbd oil http://t.co/4kPhN7Ek0L cbd oil
    that works 2020 http://t.co/4kPhN7Ek0L

  8. http://j.mp/3drY6lE · June 24, 2020

    Cbd oil that works 2020
    Hello, after reading this amazing article i am too glad to share my familiarity here with colleagues.
    best rated cbd oil http://j.mp/3drY6lE
    cbd oil that works 2020 http://j.mp/3drY6lE

  9. cbd oil that works 2020 · June 27, 2020

    Appreciate the recommendation. Will try it out.

  10. cbd oil that works 2020 · June 27, 2020

    These are in fact wonderful ideas in concerning blogging.
    You have touched some nice factors here. Any way keep up wrinting.

  11. cbd oil that works 2020 · June 28, 2020

    Terrific article! That is the kind of info that should be
    shared around the web. Shame on the seek engines for now not positioning this submit upper!

    Come on over and visit my website . Thank you =)

  12. Hobert Sudderth · July 7, 2020

    I just want to mention I am just very new to blogs and definitely savored you’re blog. More than likely I’m going to bookmark your website . You actually have outstanding article content. Appreciate it for sharing your web-site.

  13. CBD Oil · July 9, 2020

    Interesting website, i read it but i still have a few questions. shoot me an email and we will talk more becasue i may have an interesting idea for you.

  14. buy viagra in glasgow · July 9, 2020

    Oh my benefits! a remarkable short article man. Thanks Nevertheless I am experiencing issue with ur rss. Don?t recognize why Incapable to register for it. Exists any individual obtaining identical rss issue? Anybody that knows kindly react. Thnkx

  15. dog doors for security screens · July 10, 2020

    I’m not sure why but this blog is loading extremely slow for me. Is anyone else having this issue or is it a issue on my end? I’ll check back later on and see if the problem still exists.

  16. security screen doors prices · July 10, 2020

    When I initially commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added I get three e-mails with the same comment. Is there any way you can remove people from that service? Many thanks!

  17. John Deere Diagnostic and Test Manuals · July 10, 2020

    learning hypnosis is great, i used it to hypnotize myself so that i can relax`

  18. Our site · July 12, 2020

    An impressive share, I just given this onto a coworker who was doing a little analysis on this. And also he in fact acquired me morning meal since I found it for him. smile. So let me reword that: Thnx for the reward! Yet yeah Thnkx for investing the time to review this, I really feel strongly about it and enjoy finding out more on this topic. Preferably, as you become competence, would certainly you mind updating your blog site with even more information? It is extremely useful for me. Large thumb up for this post!

  19. lazarus cbd for sale · July 14, 2020

    I am usually to blogging and i truly appreciate your web content. The article has truly peaks my interest. I am going to bookmark your site and keep checking for new info.

  20. cbd oils compatition sale · July 14, 2020

    After study a few of the article on your web site now, and also I truly like your way of blog writing. I bookmarked it to my book mark web site listing and also will certainly be inspecting back soon. Pls check out my web site too and let me understand what you think.

  21. John Deere Service Manuals · July 15, 2020

    I was just seeking this info for a while. After six hours of continuous Googleing, finally I got it in your site. I wonder what’s Google’s issue is! Thank you for the help!

  22. can cbd oil for dogs be used by humans · July 15, 2020

    It?s tough to find knowledgeable individuals on this subject, but you seem like you understand what you?re talking about! Thanks

  23. cbd dog treats for anxiety information · July 16, 2020

    Youre so great! I don’t expect Ive read anything similar to this prior to. So nice to locate somebody with some original ideas on this subject. realy thanks for beginning this up. this web site is something that is needed on the internet, someone with a little creativity. helpful task for bringing something brand-new to the net!

  24. how long after giving dog cbd does it kick in · July 16, 2020

    Aw, this was a truly great blog post. In idea I would love to place in composing such as this additionally? requiring time and actual initiative to make a great write-up? yet what can I say? I procrastinate alot and also never appear to get something done.

  25. web hosting services · July 18, 2020

    Howdy exceptional blog! Does running a blog such as this require a lot of work?
    I’ve absolutely no understanding of programming but I was hoping to start my own blog soon. Anyways, if you have
    any ideas or techniques for new blog owners please share.
    I understand this is off topic however I simply needed to
    ask. Cheers!

  26. best web hosting company · July 18, 2020

    I loved as much as you will receive carried out right here.
    The sketch is attractive, your authored subject matter stylish.
    nonetheless, you command get got an impatience over that you wish be delivering the following.
    unwell unquestionably come further formerly again as exactly the same nearly
    very often inside case you shield this increase.

  27. cbd oil benefits · July 18, 2020

    An interesting discussion is worth comment. I think that you need to create extra on this subject, it could not be a frowned on subject but typically individuals are not nearly enough to talk on such topics. To the next. Thanks

  28. highest cbd liposomal capsules · July 19, 2020

    Would certainly you be intrigued in trading web links?

  29. Clicking Here · July 19, 2020

    you have an excellent blog below! would certainly you like to make some invite messages on my blog?

  30. learn the facts here now · July 21, 2020

    This really answered my problem, thanks!

  31. Sherrell Stuard · July 21, 2020

    I?m pleased, I should claim. Really hardly ever do I run into a blog site that?s both educative and enjoyable, as well as let me inform you, you have actually struck the nail on the head. Your idea is exceptional; the concern is something that inadequate individuals are speaking smartly around. I am really delighted that I stumbled across this in my look for something associating with this.

  32. Cletus Chapko · July 23, 2020

    Oh my benefits! a remarkable write-up man. Thanks Nonetheless I am experiencing concern with ur rss. Don?t know why Incapable to subscribe to it. Exists any person obtaining identical rss issue? Any person who understands kindly react. Thnkx

  33. have a peek here · July 23, 2020

    The next time I review a blog site, I wish that it doesn’t dissatisfy me as high as this. I mean, I understand it was my option to check out, but I really assumed youd have something interesting to claim. All I listen to is a lot of whining concerning something that you could deal with if you werent as well hectic trying to find focus.

  34. Hello · July 25, 2020

    Muchos Gracias for your article post. Want more.

  35. best web hosting · July 25, 2020

    I’d like to thank you for the efforts you’ve put in penning this
    blog. I really hope to view the same high-grade content by you later on as well.
    In fact, your creative writing abilities has inspired me to get my own website now 😉

  36. blog · July 25, 2020

    I found your blog website on google as well as inspect a few of your early articles. Remain to maintain the very good run. I just extra up your RSS feed to my MSN Information Visitor. Seeking forward to reading more from you later!?

  37. web host · July 26, 2020

    I don’t even know how I ended up here, but I thought this post was great.
    I don’t know who you are but definitely you’re going to a famous
    blogger if you aren’t already 😉 Cheers!

  38. read full article · July 26, 2020

    Hi! I just would like to give a significant thumbs up for the excellent details you have below on this article. I will be coming back to your blog site for even more soon.

  39. airline flights · July 27, 2020

    you are in reality a good webmaster. The website loading velocity is
    incredible. It sort of feels that you’re doing any unique trick.
    In addition, The contents are masterwork. you’ve performed a great process in this matter!

  40. click now · July 27, 2020

    Oh my benefits! an impressive write-up guy. Thanks Nevertheless I am experiencing problem with ur rss. Don?t know why Not able to register for it. Is there anybody obtaining identical rss trouble? Any person that understands kindly react. Thnkx

  41. more info · July 29, 2020

    Place on with this write-up, I really assume this website needs a lot more factor to consider. I?ll probably be once more to check out much more, many thanks for that information.

  42. find cheap flights · July 29, 2020

    This is a topic which is close to my heart…
    Cheers! Exactly where are your contact details though?

  43. 안전놀이터 · July 30, 2020

    Love watching movies !

  44. 안전해외사이트 · July 30, 2020

    Best you can see in the morning !

  45. adreamoftrains website hosting companies · July 30, 2020

    Oh my goodness! Incredible article dude! Many thanks, However I am encountering problems with your
    RSS. I don’t know the reason why I am unable to join it.
    Is there anyone else having similar RSS issues?

    Anyone that knows the solution will you kindly respond? Thanx!!
    adreamoftrains best web hosting company

  46. more helpful hints · July 30, 2020

    Youre so amazing! I do not intend Ive check out anything like this prior to. So nice to locate someone with some original ideas on this subject. realy thank you for starting this up. this website is something that is required on the internet, a person with a little creativity. valuable work for bringing something new to the internet!

  47. 안전놀이터 · July 30, 2020

    Best view in the town !

  48. Extra resources · July 30, 2020

    Aw, this was a really wonderful post. In suggestion I wish to put in writing similar to this in addition? requiring time and also actual initiative to make an excellent post? however what can I state? I procrastinate alot and also never appear to obtain something done.

  49. google flights · July 31, 2020

    For the reason that the admin of this web site is working, no question very
    quickly it will be famous, due to its quality contents.

  50. 안전사이트 · July 31, 2020

    Best view in the town !

  51. 안전사이트 · July 31, 2020

    Love watching movies !

  52. on the main page · August 1, 2020

    I?d need to contact you below. Which is not something I usually do! I enjoy checking out a message that will make individuals assume. Additionally, thanks for allowing me to comment!

  53. 안전토토 · August 1, 2020

    Best view in the town !

  54. live sex · August 2, 2020

    It’s an awesome piece of writing in support of all the web people; they will obtain advantage from it I am sure.

  55. 안전사이트 · August 2, 2020

    Love watching movies !

  56. 안전카지노 · August 2, 2020

    Best view in the town !

  57. 안전놀이터 · August 2, 2020

    Love watching movies !

  58. Check This Out · August 3, 2020

    There is visibly a package to know about this. I think you made certain wonderful factors in features additionally.

  59. website host · August 5, 2020

    Great site you’ve got here.. It’s hard to find excellent writing like yours nowadays.
    I truly appreciate people like you! Take care!!

  60. see this site · August 5, 2020

    There are some intriguing moments in this write-up yet I don?t recognize if I see all of them center to heart. There is some credibility however I will take hold viewpoint up until I explore it further. Great article, thanks as well as we want more! Contributed to FeedBurner too

  61. cbd oil · August 6, 2020

    I love my asteroid gummies!

  62. cbd oil · August 6, 2020

    CBD for the win!

  63. french doors with security screens · August 6, 2020

    Howdy would you mind letting me know which hosting company you’re using? I’ve loaded your blog in 3 completely different web browsers and I must say this blog loads a lot faster then most. Can you suggest a good internet hosting provider at a reasonable price? Thanks a lot, I appreciate it!

  64. Tucson · August 6, 2020

    Hi! I’ve been reading your site for a long time now and finally got the courage to go ahead and give you a shout out from Huffman Texas! Just wanted to mention keep up the great work!

  65. security screen masters cost · August 6, 2020

    Howdy! Quick question that’s completely off topic. Do you know how to make your site mobile friendly? My blog looks weird when browsing from my apple iphone. I’m trying to find a theme or plugin that might be able to correct this issue. If you have any suggestions, please share. With thanks!

Leave A Reply