Recently I had a conversation with a very bright entrepreneur. He was interested in taking his company public through a reverse shell merger and simultaneously raising $5MM through a PIPE transaction. He had a great history of success with his previous company selling upgrades for computers and had invested heavily in developing new software that would automate that process.

As we continued our conversations it appeared that his time lines for going public and raising capital were unrealistic. He wanted to be public in 90 days and wanted me to find a shell that was willing to take equity in lieu of cash. Did I fail to mention he also wanted me to get him a commitment to fund his deal before he would sign an Agreement for my company to represent him? He also seemed miffed that there are no guarantees as far as to how long it would take to find the right group to fund his deal.

At the time I was frustrated that he didn’t “get it” but the more I thought about it the more I realized he had no earthly idea of what work had to be performed on my part and so it is understandable why we could not come to an agreement.

In most cases the consultant or investment banker is acutely aware of all of the steps his client, the entrepreneur, will have to take to go public and raise the funds desired but the client has little or no knowledge of the work being performed for him on his behalf.

What I did lean from that experience is that many entrepreneurs have preconceived notions as to how these types of transactions go down. As well intended as they are their perceptions are far from the reality of the situation.

So, in the best interests of (a) entrepreneurs who are seeking to go public through a reverse shell merger and need to raise capital and (b) consultants and investment bankers who represent these clients I have (c) decided to write Blog series explaining what entrepreneurs need to know so they can better understand why they need representation to go public and raise capital.

Bookmark to: