I just got back from my whirlwind trip to Manhattan. I had the opportunity of speaking with several attorneys, investment bankers and companies that were seeking to go public. The trip was very upbeat and most everyone I spoke with was very optimistic about the prospects for 2007. Most are preparing for next [...]

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This is a great press release issued by Market Wire on November 16,2006: Private Companies Going Public via Reverse Mergers. Please read the article. Here are the bullet points:

Aggregate Market Cap Generated by Reverse Mergers Doubled
Third quarter of 06, 44 companies went public [...]

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For large companies, there are several advantages of the traditional IPO over the reverse merger. But for small companies, especially those that are going to be listed on the OTC Bulletin Board, the reverse merger is still the preferred choice.
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Underwriters of IPO’s provide a valuable service for large companies that are seeking to go public. They can involve institutional investors and raise large sums of money. But, in today’s marketplace, underwriters do not believe that smaller companies justify their risk reward. The average IPO today raises over $200 million. Most [...]

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Liquidity is one of the main reasons companies seek to go public. If investors have the ability to cash out their shares then they are more likely to invest. However, the more money you raise the more dilution you have. Every company would like to sell shares when their company is trading [...]

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If you have never taken a company public then you are clueless as to the amount of time management will devote to this process. The first step is the decision process to move forward with a public offering. Then there is the hiring of a qualified SEC attorney, a PCAOB qualified CPA firm [...]

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One of the riskier aspects of an IPO is that the underwriter can, at any given moment, decide to terminate their participation thus killing your deal. They can also adjust the pricing of the deal if they feel the marketplace is not embracing your deal. The state of the markets at the time [...]

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As we have witnessed over the last few years, sometimes there is no market for IPO’s. Wall Street refers to this as the IPO “window closing”. After the stock market crash of 2000 the IPO window slammed shut, especially for smaller companies. Since then, the markets have slowly come back for larger [...]

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Reverse mergers can be completed much faster than traditional IPO’s. In 2005, the SEC instituted some new rules that now make it mandatory for companies to disclose all information regarding the new company that has merged into the shell within four business days after closing. Most reverse mergers are completed within 30 to 60 [...]

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Reverse mergers cost a fraction of an IPO. Most mergers can be completed for under $1 million. In comparison, an IPO can cost several million dollars and that excludes underwriting commissions and costs. The biggest cost of the reverse merger is the cost of the shell itself. Today’s shells can go [...]

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