A Direct Public Offering (“DPO”) is very much like an initial public offering or IPO. Just like an IPO, in a DPO stock is also sold to investors. The main difference is that when undergoing a DPO when compared to an IPO, stock are sold directly to investors without the assistance of an under writer or broker firm. In both avenues of going public as long as blue sky laws are meet along with registration of the offering with the SEC a company can market its offering and sell shares directly to anyone, including family, friends, employees, customers, distributors, suppliers and more.
The advantages of a Direct Public Offering DPO
There are numerous reasons to consider a a DPO:
- Much more control over the entire process as a DPO is directly handled by the company and its DPO advisors;
- There is no need for an underwriter, so a DPO is not subject to market conditions;
- A brokerage firm does not need to be hired;
- Since a DPO is a direct listing which is essentially creating your own public vehicle from scratch. There will be absolutely no need to purchase or use an expensive and or potentially risky shell company;
- Since you will not need to purchase a public vehicle or shell company, you will be able to avoid unknown risks or liabilities inherited from the previous company;
- In terms of overall cost, a direct public offering is much more affordable when compared to under going an initial public offering or purchasing a public vehicle for a reverse merger. costs much less than a traditional initial public offering and much less than a typical reverse merger;
- As long as your private business is legitimate you will have no issues becoming publicly traded through a direct public offering.
Are there any disadvantages of undergoing a Direct Public Offering?
Yes, there are a few disadvantages of a DPO to consider:
- If you do not hire a brokerage firm the management of the private company is responsible for raising the capital on the offering;
- This process doesn’t happen over night. It may take up to ten months before your company is actually trading on a US market tier.
Another popular question from clients is what are the costs associated with a Direct Public Offering?
A direct public offering is much cheaper than an ipo or reverse merger and should be consider more of an investment rather than an expense, as you are benefiting your business in the grand picture, After all a public listing adds more value, prestige, increases attractiveness for employees through the ability to offering various stock options, the ability to use shares as leverage for acquisitions, as well as provide an exit strategy to the original founders and investors. The overall costs will vary from business to business. There are four general costs to consider:
- Advisor fees
- Accounting fees for audits
- Legal fees
- Miscellaneous, “travel, etc.”
The overall cost vary depending on the complexity of the transaction. Contact us for a quote.
How can TrueCapitalfp’s Advisors help you with a DPO?
We work with private companies through the whole process from the initial planning and brain storming to the direct implementation of all the working parts of a direct public offering. Our advisors have decades of experience in business development and investment banking. We have advised dozens of companies over the year with direct public offering process, intital public offerings and reverse mergers. We’re not in this to make a quick buck, we want to see you succeed. We won’t take on a client unless we feel they are ready or have a great chance for success.
has more than 50 years of experience in finance, operations, sales, marketing and business development. We have been involved in more than 40 direct public offerings, initial public offerings and reverse mergers. If you are looking to go public, TrueCapitalfp’s Advisors will help you get the job done right the first time around.
Call or email us today for a free no obligatory quote!