Clients considering going public in the small and microcap world often encounter consultants, public shell brokers and investment banks eager to advise them on the process. Sometimes clients meet them as a result of being cold-called, in other cases solid references make the connection.
Clients ask me to help analyze whether working with these individuals can be worthwhile. The answer, of course, is that is can be, if you find the right match for your company. Here are 10 key questions (not in any particular order) to ask someone seeking to advise you on going public, each of which we will analyze in more depth in future posts:
1. Can we benefit long-term from being a public company, and if so why is it preferable to remaining private? Is my industry and stage of development attractive for public company investors?
2. What costs should we expect to get public and then once we are public? Can you help us determine if we can afford to go and stay public?
3. How many companies have you advised that have gone public? Can you allow me to speak to the last three CEOs that you advised that completed the process?
4. Can you explain the advantages and disadvantages of the various methods of going public in today’s market and regulatory environment, including IPO, self-underwriting, shell merger and self-filing?
5. Can you assist me in raising money, and if so how would you do so and are you properly licensed if required? Again, please direct me to recent past companies you have successfully raised money for.
6. What fee arrangements do you require? Do you put any “skin in the game” either by deferring fees, taking equity for services or direct investment?
7. Do you have 3-4 non-client business references such as attorneys or accountants you have worked with?
8. Have you worked with other companies in my industry? If so, how did those experiences play out?
9. What other professionals do you bring into the process, such as attorneys, accountants, transfer agents, market makers, investor relations experts and the like? Can we obtain routine background checks on you and all individuals who will be assisting in the process of taking us public and building trading volume?
10. What do you do differently from your competitors that leads to a greater likelihood of both short and long-term success for our company?
Watch this space for more in depth discussion. To my fellow members of the Tribe, a happy and healthy New Year to you all.
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