How Should A Firm Go Public?
There are various ways to go public in the US. You can find three major grades of listing:
Here are the levels of quotation listing.
OTC PINK SHEETS:
The oldest quotation service for over the counter stocks usually called "the pinks". There are technically no requirements for reports or audited financials on the pinks, but, the pinks have instituted their own voluntary reporting system and implement it by publishing symbols to represent the level of disclosure each firm is subscribing to. To publish voluntary information requires fees of roughly $5000 a year.
THE OTC BB: The OTC Bulletin Board is managed by the Financial Industry Regulatory Authority (FINRA) and requires that all companies whose equity is traded on the OTC Bulletin Board keep their current reporting status with the Securities and Exchange Commission (SEC), which includes current audited financial statements. There are no cost paid to FINRA for this quotation, but keeping a public company current with its SEC reports can cost $25,000 - $50,000 per year.
EXCHANGES:
The OTC PINK SHEETS and the OTC Bulletin Board are convenient stock markets especially for budding and new companies, but clients with well established businesses will prefer to be on one of the mature and higher equity markets - Nasdaq Small-Cap, Nasdaq NMS or NYSE. Each of these exchanges has its own qualifications that a company must meet to be listed on the exchange. Typically the types of qualification factors they look for include asset levels, number of shareholders, required Board level committees, incomes, and market capitalization. In addition all exchanges require the company to keep a current reporting status with the Securities and Exchange Commission (SEC). Listing on the equity markets usually involves fees in the range of hundreds of thousands of dollars.
For a US company a listing on the US stock markets strengthen points. For Example, a quotation is a way to:
1) Grow your company easier and make it more powerful by increasing your ability to bring in "mergers", "acquisitions" and "strategic partners;
2) Expand your company faster and make it more powerful by increasing its ability to compete for large corporate contracts;
3) Strengthen your personal ROI as an owner by decreasing the amount of time it requires to make money on your investment, as well as increasing the value of your company, as well as, changing the liquidity of your asset to a more liquid form than that of a private company;
4)Raise money faster and cheaper by improving the "liquidity" factor for your shareholders
Now most of these considerations are for organizations going public from scratch. For those of you looking to invest in a shell corporation (public shell), to do mergers, then you might want to decide changing a quotation as above. For more information on this subject try googling phrases like "mergers companies" or "reverse mergers".
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