| | Why to Go Public? -- The Benefits Enjoyed by a Public Company- Easier access to the capital market and Lower cost of capital
- Liquidity
- having the ability to sell the stock quickly
- Investors place a high premium on liquidity
- Minority shareholders can easily cash out.
- Maximize shareholders interests by higher P/E Ratio.
- Public companies trade at significantly higher valuation than private firms with similar financial characteristics because of the liquidity of public companies.
- A private Company’s P/E is usually about 6, whereas a public company’s P/E can be more than 15. Please see the table below.
- By going public, the value of a company is immediately valued at a higher. So, new value is created for existing shareholders.
Public Companies Trade at a Premium | | Valuation Ratio | Private Company Median | Public Company Median | Public Company Premium | | Price/Net Sales | 0.6 | 2.0 | 221% | | Price/Gross Cash Flow | 7.1 | 16.1 | 126% | | Price/EBIT | 6.5 | 15.4 | 138% | | Price/Net Income | 7.3 | 22.0 | 201% | Source: Business Valuations Resources (www.bvmarketdata.com).
Valuation data based on 5,623 private company transactions and 641 public company transactions between 1/91 to 4.04. Universe restricted to transactions under $100 million. |
- More revenues for future financing
- Public company's stock can be used as collateral for loans.
- Creation of a stock currency to fund potential acquisition
- Enhancing corporate visibility and prestige
- Better company Image and more marketing and PR Benefits
- Equity-based compensation for management and employees
- increasing employee’s royalty and enthusiasm
- Make benefits package more attractive by offering stock or options to let employees work for the company’s success.
- Assists management succession
- Lowering risks by distributing risks to public market.
What's Challenges of Listing?How to Go Public? -- Traditional IPO vs. Reverse MergerWhat do We Help?- We screen the private companies to ensure that they have the solid financial characteristics, strong management team, and robust growth prospects to attract Wall Street investors and to develop liquidity when trading.
- We assist on every step in the going-public transaction from selecting the shell company, preparing and filing SEC documentation, developing capital markets strategy, raising capital as needed, and applying for listing on NASDAQ or AMEX.
- We assist on Sarbanes-Oxley compliant and investor relations.
- We provide after market support to the company to create actively traded, widely held and fully valued stocks.
- MOST IMPORTANT: We invest or we raise money for you!
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