Time to become a public company? By Robin Trehan (B.A, MIB, MBA) Thursday, 24th November 2005

OK, so you want to go public?

You have valuated the market and determined what you are going to do with the capital raised. You also have precise ideas about your products & services and their unique selling point (USP’s). Beside this you know that you are in the right sector, have the right management capabilities and a team to go public. You have contemplated how to go public, which is by Initial Public Offerings (IPO’s), Reverse merger / Takeover (RTOs) etc.  

The question of choosing the right trading board is the next question? You have analyzed whether you want to trade on NASDAQ, the NASD OTC (National Association of Securities Dealers over the counter bulletin board) or the NQB (National Quotations Bureau – Pink Sheets). You choice are based on your experience, management capabilities, in house support and the amount of cash on hand.  

If you are cash short and want to test the water, you know that NQB-Pink Sheet board might be the right one for you. The NQB-Pink Sheet board is very fast and comparatively less expensive. The levels of reporting required on Pink Sheet are considerably fewer in terms of audits and SEC reporting. A company can initially begin trading on the Pink Sheets, if they want to become public quickly. Then based on the response from the public and the success of the company, they can move up to the OTCBB or other higher board.  

You also know going on NQB-Pink Sheet board is risky as there are chances, that that you will not be able to raise the requisite capital. After the dot com bubble bust investors are shying away from less audited reporting companies. You know that you have brain- stormed with you internal core team about raising money both within and outside. You know how much money you want to raise through equity or debt, you know your company valuation and know what percentage of the shares goes to the investor.

You have also thoroughly analyzed the option of private placement and other means of raising capital.You understand the role of the investment bankers in the transaction. You know that for your company to grow and expand in a cutthroat marketplace, the availability of capital is the most critical element. Investment bankers works with you, hand-in-hand, to find the most appropriate forms of capital by identifying the needs of the company, and then finding the capital structure that best fits that need. The investment bankers will go through each and every step of taking you company public by raising money for you. Good investment bankers will review your business plans and make it full proof. 

Each phase of the business plan will be properly time framed with time specified tasks and probable results. You will weave a MAT (Milestones, Assumption and Tasks) and work on it. You business plans, managerial business plan, financial business plan, marketing business plan, balance sheet, income statement, statement of cash flows, current investment position will be analyzed and fine tuned to bring in overall success of the offering.  

You know that investment banker is a critical player in the team. Typical fee for the investment banker depends on the range of money to be raised but it is in the range of 7.5% success fee and a 2-3% unaccountable allowance.

Now you are going public and you know your responsibility to the stakeholders. You know you have taken big step and risk and rewards are directly proportionate. You know that you will be successful and most importantly you have the courage to follow your heart and intuition. You have a competitive spirit to play and win, you are accountable as you own the outcome, and you have the desire to be recognized as “the best.”

Robin Trehan is managing director and vice president at CBK Family & National Hotel Exchange. He is an expert in the field of dynamic strategic planning and e-business. He can be reached at robin@nationalhotelexchange.com